Status quo on CIL output target

Status quo on CIL output target

Calcutta, Jan. 4: PSU Coal India is likely to stick to its production target this fiscal in the face of stagnating production and poor offtake.

Union coal and power minister Piyush Goyal said while his ministry was closely monitoring the demand-supply situation, targets are expected to remain firm.

Coal India's production and offtake grew 1.1 per cent and 0.6 per cent, respectively, in the April-December period.

The public sector miner still has to produce 220.84 million tonnes in three months to meet its annual target.

According to industry analysts, this will be a tall task and Coal India is likely to fall short of the 598.61 million tonnes originally estimated.

According to the coal ministry, power plants were flushed with coal stock of 27 days as on April 1, 2016 because of high production in 2015-16.

Coal India started the current year with an opening stock of 57.7 million tonnes, resulting in accumulation at the pitheads. The miner, however, has taken measures such as spot e-auction and linkage rationalisation to clear the stock.

Poor lifting of coal by some of the power utilities, particularly those located far away from the mines, has affected offtake. Moreover, sporadic law and order problems at CIL subsidiaries - Mahanadi Coalfields Ltd and Central Coalfields Ltd - have also affected production.

"This is a dynamic situation. We continuously keep monitoring the demand-supply situation. Power production has improved. I would like to make sure we never again go back to the days of coal shortage. Therefore, I think it is important that we continue to have aspirational goals. Then we can also substitute some imports," Goyal said.

The minister was also not keen to revise the 1.5-billion production target by 2022 despite a draft report by Central Electricity Authority advised against fresh capacity addition from coal.

Goyal said more than 70,000 MW of capacity is in the process of being implemented that requires coal as feedstock.

Coal India's production and offtake during the second quarter ended September 30 stood at 104.37 million tonnes and 115.87 million tonnes, respectively, which were lower than the year-ago period.

The average realisation of coal in the first six months through fuel supply agreements stood at Rs 1,264 per tonne.