By Sudarshan Varadhan
NEW DELHI (Reuters) – India’s aluminium smelters, textile mills, sponge iron and fertiliser-makers say they face a coal shortage as power generators take the bulk of supplies.
India’s top miner Coal India Ltd, which accounts for more than 80% of India’s production of the fuel, and the federal coal ministry, deny there is a problem.
In a letter to the Prime Minister Narendra Modi dated Feb. 7, eight industry associations including the Aluminium Association of India and Fertilizer Association of India urged the government to ensure a “justified ratio of coal allocation between power sector and industries”.
They do not give precise figures on the extent of the shortage, but industry officials said the government’s policy of prioritising coal shipments to power generators rather than the non-power sector in response to high prices and reduced imports had caused panic and uncertainty.
Supplies to the non-power sector have been lower than last year, and the number of trains supplying coal to it dipped to 12-14 trains per day at end-January, compared with 36 in August, the Coal Consumers Association of India said.
India’s coal ministry told Reuters in a statement that it expected availability of trains to the non-regulated sector to get better, adding that any shortfalls in the number of trains would be addressed soon.
India’s coal imports slumped to a nine-year low in 2021, largely because of high global prices, increasing consumers’ dependence on Coal India.
GRAPHIC: India’s thermal coal imports fall to 9-yr lows https://graphics.reuters.com/INDIA-COAL/IMPORTS/zdvxoaezopx/chart.png The miner increased output to record levels, but largely catered to utilities – in line with its legacy of giving precedence to power plants. GRAPHIC: Coal India production hits record highs, https://graphics.reuters.com/INDIA-COAL/IMPORTS/byvrjxayxve/chart.png
While higher production by Coal India helped India through its worst power crisis in nearly four years, the non-power sector is still suffering from a lack of supplies from Coal India, industry officials say. GRAPHIC: Benchmark coal prices pushed to new highs in late 2021 on surging global use, tight gas supply, https://fingfx.thomsonreuters.com/gfx/ce/mypmnjrdzvr/NewcastleCoalFeb2022.png
“Industries are unable to ascertain the magnitude of crisis and plan for the future,” the associations said in the letter.
(Reporting by Sudarshan Varadhan; editing by Barbara Lewis)
