Kovid changed, consumption increased, coal ran out; Why the power shortage? | Coal Shortage India | GIT Inventory Management

India is not a country where there is a shortage of coal, India has the world’s largest coal mines. Yet why is there a shortage of coal in thermal power plants? Why is power generation itself declining and moving towards power shortages? One of the answers is Just In Time (JIT) Inventory Management. The heads of the National Thermal Power Corporation (NTPC), India’s largest producer of thermal power, point out that it was the consultants who brought about such reforms that led to today’s decline. To its secrets …

Huge collection of old times

Six years ago, all thermal power plants had coal reserves of 3 lakh to 5 lakh tonnes. Coal India Limited, which operates under the Ministry of Coal, will bring in and stockpile the mined coal. Coal stock is always available for one month of power generation.

That situation changed with the arrival of a few consultants. They reported that inventory management should be made more efficient. Storing coal weeks in advance will increase the cost. Instead, the cost can be reduced by just delivering coal (just in time inventory) for power generation. Their calculations were that adding and subtracting would also reduce the unit rate of electricity by 5 paise. This is Toyota’s power generation!

Take and pay

Coal India has been asked by all thermal power plant managements to stop sending coal earlier. Coal India also reduced its production with the advent of thermal power plants, which were stockpiling for only three or four days instead of producing and storing more. Switched from Take or Pay to Take and Pay.


One of the coal mines in India. Image: AFP

Thermal power plants will pay only for the amount of coal taken. According to the agreement on how much coal to take in a year, he stopped taking coal earlier and stopped paying. With that, it became impractical to dig and store more. Coal India also switched to mining only on demand. Coal production also declined due to Just In Time mining.

The arrival of Kovid

During the Kovid period, power consumption fell sharply as all factories and offices were closed. The ‘load factor’ decreased in all thermal power plants. As a result, thermal power plants have further reduced their coal intake from Coal India. Coal India has demanded that the load be taken as per the contract but no one is listening. No one was willing to take on more coal and increase the cost of stocking it when power generation was low. The fear was that the ‘inventory carrying cost’ would increase.

Missing demand increase

In fact, during the Corona period, when power consumption was low, all thermal power plants could have stockpiled large coal. It did not. Efficiency and cost reduction were considered important. At that time, it was thought that the corona period would be over and electricity consumption would increase rapidly and then more coal would be required.


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One of the coal mines in India. Image: AFP

Experts say the JIT theory may be correct in some places. But what if you see an increase in demand and fail to plan accordingly? That is where the Union Electricity Ministry also made a mistake.

Pithead Thermal Power Station

The 17 thermal power plants generating 35,000 MW across India are close to the coal mine. All but a few of these ‘pithead’ thermal power plants (mines within 20–30 km) are currently in crisis. They are digging themselves. Coal is delivered by their own rail line. NTPC has such thermal power plants and private trains. Coal trains do not run on Indian Railways. Even at such plants, the coal stockpile is now low, despite the proximity of the mine. Whose fault is it?

Old-fashioned mining methods

Although India has one of the largest coal reserves in the world, Coal India uses very old methods. There are no advanced technologies. There are no advanced machines. Millions of workers are still employed. Coal India has 2.75 lakh employees in Bihar, Uttar Pradesh, Odisha, Bengal and Madhya Pradesh. An area where no reforms can be implemented.


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Environmental activist with coal-stained hands. Image: AFP

Woe to the Railways!

The inefficiency of Indian Railways is causing problems in coal debt. There are not enough goods racks. Goods trains are delayed indefinitely.

Season mining

During the months of August, September and October every year, coal mining in North India slows down due to rains. At the same time, power consumption is declining. It is during these months that electricity is used less for agriculture. Time after harvest. However, those who kept stock for at least 15–30 days of power generation switched to three or four day stock with the introduction of Just In Time Inventory. In short, there is no coal stock.

Coal production

India’s coal production is 73 crore tonnes (2019–20), but in 20–21 it dropped to 71.6 crore tonnes. Power generation was also declining due to the Kovid period. Now? From April to September this year, coal production was just 31.5 crore tonnes. That is not the fault of Coal India alone.


Electricity-Electric-Line

Thermal power plants have been negligent in estimating the increase in demand. Consumption increased in September-October. Their consumption forecast was much lower than current. They did not see that Kovid would change rapidly and consumption would increase. Coal was not stockpiled accordingly.

During the last week of September and the first week of October, the demand for electricity increased by 15% compared to the demand in 2019. Accordingly, there is no coal. That is the reason for today’s crisis. Just in time inventory can take months to replace. Another way is to modernize the mining itself and increase coal production. It’s just that it will take time.

English Summary: Why there is Coal Shortage in India; An Analysis

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