Govt may revise Coal India output target downward

The coal ministry is mulling reduction of Coal India’s production target for the next fiscal with the country likely to end FY16 with a stockpile of 90 million tonne — 55 MT at CIL’s pitheads and 35 MT inventory at power plants.

The ministry has set the target for CIL to produce 605 MT in FY 17. So with a pithead stock of 55 MT, the coal behemoth will have to make plans for selling 660 MT.

Considering such a situation, a section of ministry officials has mulled retaining CIL’s coal production target for FY17 at 550 MT, same as FY16 since this would make more business sense.

The state-run company ended FY15 with a pithead stock of 53 MT but coal inventory at the power plants were not significant.

“Selling 660 MT is impossible at the current demand scenario and at the present pace of power capacity addition,” a CIL official said on the condition of anonymity

In the current fiscal CIL sold 45 MT more than it sold in FY15 despite the fact that e-auctions were not a great success. Even after higher sales the company would be left with a stock pile of 55 MT and this quantity has to be sold on a priority basis, the official said.

While the coal behemoth was given a target to produce 550 MT in FY 16, it is likely to end the fiscal falling 15 MT short of its target. CIL has already developed preparedness to increase productivity if there is a sudden surge in demand. Increasing stockpile would only lead to degradation in quality besides posing the risk of getting inflamed.

There are also environmental issues relating to stockpiles.

While the matter has been mooted, coal and power minister Piyush Goyal was yet to take a call on it, the ministry official said.

However, coal secretary Anil Swarup was of the opinion that slug in demand was temporary and it would pick up with distribution companies buying more power and industrial production moving up.

“The so called surplus of coal is because of low PLF,” Swarup said. He said although there has been hue and cry that domestic coal has become costlier than imported coal, imports in the current fiscal have come down by 15% resulting in Rs 2,300 crore worth of savings in foreign exchange.

The power plants have 26 days of inventory, which is an ideal stock situation. Average rake availability has gone up from 190 per day to 209 a day, which is certainly helpful in transporting more coal. So things were moving according to the pace of growth in coal production, Swarup said.

According to former CIL chairman Sashi Kumar, although coal was in abundance, there were many consumers, especially the small ones, still starving for want of coal.

Admitting the lack of supplies to small consumers, Swarup said the Cabinet has decided to allot blocks to states for commercial mining, which would support small consumers.

A section of CIL officials was, however, of the opinion that while there was no harm in allotting coal blocks to the state governments for commercial mining, the target for CIL’s coal production should be made to keep a balance between demand and supplies.