National company Coal India Ltd. has temporarily stopped supplies to its non-power consumers while simultaneously cutting contracted supplies on the back of the coal shortage in the country.
Coal India elaborated that it had stopped all online auctions of coal except those meant for the power sector. This means non-power consumers include aluminum smelters, cement manufacturers and steel plants will be hit hard by the decision when they made up around a quarter of India’s total coal consumption.
According to an official, long-term contracts will also see some reductions although not completely stopped.
Coal India did not disclose the real amount of supply being curtailed as it did not immediately respond to a request for comment.
“This is only a temporary prioritization, in the interest of the Nation, to tide over the low coal stock situation at the stressed power plants and scale-up supplies to them,” Coal India stated.
On Wednesday, the Aluminium Association of India (AAI) said in a letter to Coal India’s chairman that some long-term contracted supplies were being stopped, and auctions for the non-power sector were inadequate. It added that the industry is caught off guard too much to devise any mitigation plan.
AAI mentioned that coal stockpiles were at alarmingly low levels and high global prices had made imports not feasible.
Due to the shortage, India has to compete against big buyers including China which also needs to spur imports amid a severe power crunch. Many Indian buyers have shifted to local coal but the government has tasked utilities to boost imports as Coal India was unable to meet demand.
Most of India’s 135 coal-fired power plants have fuel stocks of less than three days.
