Coal availability for power plants to improve from October: Icra

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Ratings agency Icra said on Wednesday that the availability of coal to power plants is expected to improve gradually in the current month, with augmentation at both coal production and dispatch levels. The domestic ratings agency said that the seasonality in energy demand moderation is also expected from the month of November. It added that the availability of thermal plant for majority of IPPs and gencos having long term Power Purchase Agreements (PPAs) is unlikely to remain below 85% on an annual basis as a result.

Adding to that, any adverse impact on the credit profile is also unlikely, given the two-part nature of long-term PPAs with recovery of fixed charges linked to availability of 85%, it said.

Supply up 2mt

In the first half of FY22, energy demand rose sharply with a 12.7% YoY. However, the position of coal supply was constrained due to monsoon impact on coal production and dispatch activity in August and September 2021. Also, Coal India (CIL) placed regulation on fuel supply to few state generating utilities, owing to delays in post payment and lower off-take of costlier imported coal.

The ministry of coal said on Wednesday, that cumulative coal supplies to thermal power plants crossed two million tonnes on Tuesday and the dry fuel dispatch is being enhanced to the plants.

Supplies to power stations have already reached 1.62 million tonnes a day in the last two days, with a total offtake increased to 1.88 million tonnes per day as against month’s average of 1.75 million tonnes, according to Coal India official.

The company is also ramping up its output to 1.6 million tonnes a day in the last two days and CIL expects to raise production after dussehra, as workers come back from holidays and the attendance expected to pick up, the official said.