Captive power units turn to Russia as domestic coal supply fails to resume

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Reeling from the shortage of domestic coal, captive power plants (CPPs) have resorted to importing coal from Russia and turning to grid power supply. Despite this, their condition is worsening as nearly 30% of CPPs across the country are closed as they struggle with zero domestic supply for a year now and most of them unable to source imported coal. more expensive.

Steel, cement, metals and related industries build their own power plants (captive units) to meet the energy demands of the manufacturing process.

Chennai-based India Cements said the company had already imported two shipments of Russian coal due to domestic supply shortages. “Most of our plants have captive coal-fired generation. The cost of captive production is now higher than the cost of the network. Therefore, we have shut down all captive power units and resorted to mains power,” said N Srinivasan, Vice President and General Manager of India Cements.

During the last quarter, India Cements recorded a 54% increase in the cost of electricity and fuel. According to producers, the cost of electricity from captive units has reached Rs.10 per unit, compared to Rs.7 per unit for grid power.

From the steel industry, players like Jindal Steel and Power Ltd (JSPL) and Arcelormittal Nippon Steel India are said to have imported coal from Russia. India Cements said that although cement majors can import from countries like Australia, Indonesia or South Africa, discounts on Russian coal make it more attractive to the industry.

The representative body, Indian Captive Power Producers’ Association (ICPPA) told Business Standard that coal-fired captive power plants either stopped production due to coal shortages and high cost of operations or turned to the purchase of electricity from the network or coal from the world market.

“Nearly 30% of CPP production has moved to the network in the past few months. CPPs which are far from the beachheads are suffering the most and Indian Railways are not supplying them with rakes,” Rajiv said. Agarwal, Secretary General of ICPPA Shifting electricity demand from CPPs onto the grid is causing increased demand for that state, which in turn is causing increased pressure on the national coal supply.

India has a total installed CPP capacity of 78,000 megawatts (MW), of which 40,000 MW or 55% is based on thermal coal, which requires about 200 million tonnes (MT) of coal per year. According to the ICPPA, nearly $30 billion of investment in the country’s PRCs and nearly 1.5 million workers are directly and indirectly employed in this sector.

Coal-Mint, a coal pricing agency, recently said that India bought 2.06 million tonnes of coal from Russia, making it our third-largest supplier. India’s overall coal imports, including anthracite and PCI coal shipments, fell nearly 10% in July to 23.8 million tonnes, compared to record imports of 26.29 million tonnes in June .

Recently, 10 different industry associations wrote to the Prime Minister’s office asking for his intervention and that a fair supply of coal be ensured between the energy and non-energy sectors. They said the cost of coal for these sectors had doubled as they had to buy more expensive imported coal.

Since August last year, when the coal supply and demand mismatch began, the non-power sector, including CPPs, has seen coal deliveries fall by 33%. When the coal shortage began in August last year, the Center ordered national miner Coal India Limited (CIL) to prioritize power generation units for coal supply and to divert coal other sectors if necessary.

“Since then, the situation has deteriorated and we are looking for options. The big players are importing coal which is more expensive, but the smaller players don’t even have that capital. The rate of coal auctioned by CIL has also increased due to increased demand,” said a steel company executive.

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