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Coal India production picking up but domestic shortage to persist for 2 to 3 years

25 Jul 2018

Green shoots are emerging for State-owned miner Coal India Limited (CIL), with first-quarter coal production and sales increasing, but the government has warned that the domestic coal shortage will persist for the next two to three years.
 
CIL achieved a production growth of 15% during the June quarter to 136.87-million tons and offtake by thermal power plants was also up 15% to 122.8-million tons.
 
CIL had been set a production target of 630-million tons for 2018/19, against 567-million tons achieved in the previous year, but a section of consumers felt that the green shoots were a blip.
 
Having missed the 2016/17 target by 5% and the 2015/16 target by 3%, internally, CIL officials, too, are preferring to see it as an “aspirational target”.
 
With June 2018 production pegged at 44.88-million tons, 5-million tons higher than corresponding month of previous year, CIL officials said that the focus was on enabling all thermal power plants to maintain the normative coal stocks of 22-days consumption equivalent and working with State transporter Indian Railways to increase loadings of dry fuel to 217 rakes  a day, against an average of 189 rake a day at present.
 
However, the thermal power sector remains pessimistic over prospects of easing of fuel supplies any time in the short term.
 
“Coal shortage in the power sector will persist for the next two to three years and various State governments have been asked to allow imports to feed thermal plants operated by them,” Power Minister R K Singh said in a statement.
 
“There is an acute shortage of coal and this is evident because demand for power is growing. Coal will continue to be a problem till new mines are opened,” he said.
 
The miner, in a statement last week, announced that it had 119 major coal projects under various stages of development with the potential to add 322-million tons to its aggregate production capacity.
 
Although CIL stated that these projects were expected to enter into production in the current financial year, industry insiders expressed reservations on whether such a timeline could be achieved.
 
On the logistical front, the government expected that higher production over the next two years would coincide with improved railway infrastructure to facilitate higher volume evacuation from pitheads.
 
Several of CIL’s operational wholly owned subsidiaries have lined up investments to the tune of $880-million to construct railways lines on behalf of Indian Railways, ensuring faster transportation of the dry fuel to thermal power plants. 
 
Source: miningweekly