Mumbai, April 25 (Bureau) Severely hit by coal shortage, industry bodies, representing the manufacturing and MSME sectors and the captive power plant based industry, have sought Prime Minister Narendra Modi’s intervention for ensuring regular supply of the fossil fuel to the non-regulated sector. As many as 10 industry associations have come together and sought the PM’s personal intervention on the urgent matter to ensure survival of the manufacturing sector, amidst the prolonged shortage in coal supplies to the non-regulated sector. These 10 associations include Aluminium Association of India (AAI), Coal Consumer Association of India (CCAI) Confederation of Indian Textile Industry (CITI), Indian Captive Power Producers Association (ICPPA), Indian Paper Manufacturers Association (IPMA), Sponge Iron Manufacturers Association (SIMA), Tea Association of India (TAl), The Fertiliser Association of India, UP Paper Mill Power Plant Owners Association, and Vidarbha Industries Association.
In their letter, the industry bodies stated that under the current situation, industries, especially continuous process plants are compelled to purchase power from the exchange, causing power demand to increase and inflate the exchange rate of power significantly. “This is resulting in less availability of power for domestic consumption as it is difficult for the state distribution companies to source such high volume of power at excessively higher rates. Ultimately, this tends to increase inflationary impact on every stakeholder of the economy,” they said. The associations have highlighted that it has been to the detriment of the nation’s industrial or non-regulated sector, which has languished in the meantime due to throttling of coal supplies to industries across the country. According to the associations, since September 2021, several restrictions have been increasingly imposed, resulting in significant curtailment of the coal supply to industries. “The non-power sector received a brief respite from the situation in November 2021, but this was short-lived and supplies to NRS customers via rail mode plunged once again, as preference of supplies was given to the power sector. Curbs were also placed on road supplies to the NRS sector, adding to their woes,” it noted. The associations pointed out that these restrictions have been imposed despite Coal India achieving a record-breaking production of 622.6 MT in FY 22, while its official coal offtake figures have also been commendable at 661.90 MT during the same period.
The prolonged shortage has had far-reaching effects on multiple industries, including the cement, steel, sponge-iron, aluminium, chemicals, rayon, textiles, etc. and a large number of SMEs and their associated CPPs, it said. The associations highlighted that as per guidelines, the recommended proportion in coal allocation to sectors need to be maintained at a level of 75 per cent for power and 25 per cent for non-power. “However, the actual supply ratio has been much lower in the past seven months. They also added that many NRS consumers have been forced to procure coal from the open market due to the prolonged shortage, often at a premium of up to four times the normal rates,” it said. In March 22, coal has commanded a premium of 300 per cent over the floor price, indicating a severe demand-supply mismatch. “The ongoing situation has also forced industries to procure power from the exchange, stoking an unwarranted increase in power demand and leading to an avoidable inflationary impact on economic stakeholders. This is also reducing the availability of power for domestic consumption as state discoms find it difficult to source large volumes at the excessively high prices,” it added.