Thermal power plants are battling with coal inventory sliding to critical levels for the second time in around seven months. Given that both coal mining and rail transportation are controlled by GoI-owned companies, it reflects negatively on the government’s management of a critical economic input. Tamil Nadu’s administration wrote to Prime Minister Narendra Modi last week, requesting assistance in the shape of sufficient railway rakes to transport enough coal. This expresses the gravity of the situation.
The Central Electricity Authority’s report show that many plants have indicated inadequacy of railway rakes as the reason for low stock. It’s inexplicable. Coal provides about 49% of railway freight earnings and is the key to a healthy financial performance. It’s puzzling how railways finds itself unable to anticipate the infrastructure needs of the most important item it moves. What makes the current situation worrisome is that planning deficiencies at the central level have come in the backdrop of a weak financial position of state government distribution companies. This makes it unlikely they will use imports to fill the gap as the benchmark coal Australia price has more than doubled in a year to an average of $197 per tonne in the January-March quarter.
