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Coal India Ltd has temporarily halted coal supplies to non-power end-users as power plants in the country were struggling with the worst fuel supply crunch in years.
The country's largest coal producer said in a statement that it had stopped all online auctions of coal except those meant for the power sector. Supplies under long-term contracts would be curtailed, although not completely stopped.
This is only a temporary prioritization in the interest of the nation to tide over the low coal stock situation and ramp up supplies to them, an official with the company said. The suspension will last until further notice, said Coal India's arm South Eastern Coalfields Ltd.
The supply crunch broke out at the time when Coal India posted a record coal production in the first half of the fiscal year.
Official data showed the company produced 249.8 million tonnes of coal from April to September, almost 13.8 million tonnes more than in the same period last year.
Even since the demand for coal reached a higher pitch from the power sector from August, supplies to the non-regulated sector consumers were close to 18 million tonnes during August-September, clocking a rise of 37% compared to the pandemic-free August-September 2019.
India's coal ministry said it is the significant rise in demand that has led to the current situation, following an unexpected economic revival after the pandemic.
"Coal India usually stocks its reserves and power plants during April-May. However, due to the second COVID-19 wave, this was delayed. Secondly, during the monsoon, imports and transportation within India also get delayed," said an official in the Coal Ministry.
Meanwhile, the rise in global coal prices deterred power plants that used to be highly dependent on imported coal from purchasing and forced them to compete with non-power buyers for domestic coal, which aggravated the domestic supply tightness.
(Writing by Alex Guo Editing by Tammy Yang)
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