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PLAGUING THERMAL POWER GENERATORS

UPSC CURRENT AFFAIRS | THE PROBLEMS PLAGUING THERMAL POWER GENERATORS | 25TH JUNE | THE HINDU

/ June, 2022, UPSC Daily Current Affairs

SYLLABUS SECTION:

WHY IN THE NEWS?

Recently, India’s power demand touched a record high of 211 MW even as the coal shortage continued with coal stocks available only for eight days | PLAGUING THERMAL POWER GENERATORS.

  • To bridge the gap between shortage in domestic supply and increasing demand, power­generating companies or ‘gencos’ were directed to use imported coal for 10% of their requirement, failing which their domestic supplies would be cut.

MORE DETAILS:

India is the second largest producer of coal, with reserves that could last up to 100 years.

Why does India have a recurring power crisis?

  • The domestic production of coal stagnated between FY18 and FY21, but revived in FY22.
  • The power demand too surged owing to economic recovery and hotter weather conditions.
  • By FY22, the reliance on imports dwindled to 3.8% which built pressure on domestic supplies.
  • Until FY20, domestic sources contributed to about 90% of the power sector’s coal receipts; the remaining was fill by imports.
  • The coal imported by power plants declined to 27 MT in FY22 from 66.06 MT in FY17.
  • Coal imported for blending purposes by power plants that run on indigenous coal declined to 8 MT in the last financial year, from 19.7 MT in FY17.
  • This dip in imports can be attributed to the skyrocketing prices of coal in the international markets.
  • The price of imported coal is nearly 5­6 times higher than domestic supply.
  • States are wary of using imported coal as it would raise the cost of power substantially.
  • The shortfall in domestic supplies and the rising cost of imports have put power plants in a precarious situation.
PERENNIAL BOTTLENECKS
  • The use of imported coal will push up the price of power supply to the power distribution companies or ‘Discoms.
  • Discoms are the weakest link in the power sector chain in PLAGUING THERMAL POWER GENERATORS.
  • Discoms owe long­standing dues to the tune of ₹1.16 lakh crore to the gencos.
  • According to the 2019­20 report by the Power Finance Corporation, discoms had accumulated losses up to ₹5.07 lakh crore and were therefore unable to pay generators on time.
  • Delays in payments by discoms create a working capital crunch for generating companies which in turn inhibits them from procuring an adequate quantity of coal.
  • Delays in payments by discoms create a working capital crunch for generating companies which in turn inhibits them from procuring an adequate quantity of coal.
  • Discoms are bleeding because the revenue they generate is much lower than their costs.

SOURCE: THE HINDU