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Coal India misses production target again; imports likely to increase
Posted on 7th March 2018
The import of thermal coal is likely to increase in the coming months, as Coal India is set to miss its production target again – for an 11th straight month – causing a fuel shortage at the country’s thermal power plants. This is particularly worrisome as the demand for coal is likely to increase further as summer approaches.

The coal monolith’s output from April 2017 to February 2018 stood at 495.09 mt, seven per cent lower than the 531.32 mt target set by the coal ministry. Similarly, sales volume during this period is set to fall three per cent short of the 541.60 mt target.

With less than a month left in the present financial year, the world’s largest coal miner looks set to miss its 600 mt annual target for 2017-18.

The situation in the power sector, on the other hand, continues to deteriorate. As on February 28, 2018, as many as 51 power plants were classified as critical or super critical, with the average coal stock standing at 10 days’ requirement, as against the prescribed norm of 22 days’.

A Coal India official said that all plants classified as critical or super critical were non-pithead plants; that means these did not lie within the catchment area of the coal mines, so theyhad to be fed with either road or rail network.

According to sector experts, the primary constraint is non-availability and load time for railway rakes. A power sector official opined that the Maharatna miner was loading nearly 250 rakes a day, even as the rake availability had now improved – the loading time needed to be improved. Also, there is the problem of bottlenecked railway tracks right from the pit-head to the plant, as well as congestion in the network.

To decongest the railway network, Coal India had envisaged three critical coal corridors – Tori- Shivpur, Jharsuguda-Barpalli and Mand-Raigarh railway lines – but the progress hasn’t been satisfactory even for company officials.

“It’s not only a problem of insufficient production.

After all, we have to send coal to the plants as well. In case there is a severe disparity in production and despatch volumes, pithead stocks will increase, and so will the risk of accidents, including fire,” a Coal India official said.

Also, land acquisition problems, delays in clearances for opening of new mines, law-and-order problems especially at the mines of Central Coalfields and Mahanadi Coalfields, and excess rainfall in August and September also hampered production.

An analyst with ICRA Ratings said Coal India could eventually address these concerns, but that would take time, so thermal plants might have to fall back on imported coal to meet electricity demand in the coming summer season.

Every year, the demand for power, both from the industry and households and other commercial establishments, goes up substantially in summers.

According to data from the Directorate General of Commercial Intelligence and Statistics (DGCIS), coal, coke and briquettes imported by India during 2015-16 stood at 207 mt, leading to a forex outflow of $13.67 billion. In the previous financial year, imports had fallen to 195.4 mt but the forex outflow had increased sharply to $15.76 billion. This financial year (April-December), coal imports stood at 157 mt, resulting in a forex outflow of $16.3 billion.

“Given the coal situation at power plants and Coal India’s production figures, imports might increase, especially for the coastal plants that can be fed directly by sea,” a market analyst said.

In the first three quarters of the current financial year, India had already imported 80 per cent of the volume it did in full 2016-17.

The analyst further said that 18.49 mt of coal would have been imported during January. This is 12.4 per cent higher than that in January 2017. Official data for the current calendar year is yet to be released by DGCIS.

Last month, World Coal Association Chief Executive Benjamin Sporton had predicted higher coal imports by India in the 2018-19 financial year.

Related Companies: Coal India Ltd   

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