Coal India's import plans put on hold

Increased availability of domestic coal and lack of buying interest has put Coal India’s import plans on hold. In June 2012, CIL prepared a road map to import 18-20 million tonnes, to fulfill its supply commitments to power generation sector, in the last fiscal. The company was agreement-bound to mitigate a minimum of 80% fuel requirement of nearly 60,000 MW of generation capacities scheduled to be added between April 2009 and March 2015.

Due to an estimated short-supply of domestic coal, it was decided that 65% of the requirement will be met through CIL’s own production, and the rest 15% will be sourced from overseas markets on cost plus basis. A year later, the entire exercise appears to have lost its purpose.

Adequate domestic supplies

A slower growth in demand compared to initial estimates, and 7.4% rise in supplies (off-take), helped CIL to fulfill its supply commitments (80% for new stations and 90% for older station set up before April 2009) without resorting to imports, in the last fiscal. And, as in May 2013, when demand for electricity is at its peak, the miner is flooded with requests to slow down dispatches. There is no immediate plan to import either.

“Some consumers expressed initial interest to import 5.6 million tonnes through CIL in the last fiscal. However, they are yet to submit any firm commitment without which imports cannot be executed,” a company official informed.

According to him, though CIL has exceeded its targets in supplying coal to the electricity generation sector as a whole, approximately 10-12 new consumers (post April 2009) received less than the promised 80% supplies, due to logistics issues. “Ideally, CIL should supply the balance quantities through imports. However, we are yet to see any consumer interest in this regard,” he said. The reasons are apparent. CIL never imported coal in its history and, has little ability to do so either. Naturally, the miner will bank on any State-owned trading agency to execute the order, adding on to the cost of imported coal.

India's National miner sets for itself ambitious daily loading targets

Meanwhile the world’s largest coal miner, CIL, has set for itself an average daily loading target of 212 railway rakes for the current fiscal (2013-14) against the daily average of 186 rakes recorded in 2012-13. CIL’s additional loading target of 26 rakes a day, however, seems ambitious.

But the national miner hardly has any choice if it is to achieve targeted despatches (what it calls ‘offtake’) of 493 million tonnes comprising 482 million tonnes of production and another 11 million tonnes of stock liquidation, during the year. In 2012-13, it cobbled together offtake of 465 million tonnes, 452 million tonnes of production and 13 million tonnes of stock liquidation.

Since this April, CIL has managed to improve its daily numbers considerably, although not reaching targeted levels. In April, average daily rake loading was 201.5, registering 11.4% growth over 180.6 in the same month last year. “We would have achieved a much higher level of growth had we hit targeted loading,” said S. Narsing Rao, Chairman of Coal India. “Every additional loading of 1.8 rakes entails one percent extra growth.”

“We ourselves, and not the Railways, are to be blamed,” Rao says about the failure to meet the target. He pointed to problems last month at mines under the Eastern Coalfields Ltd (ECL), Mahanadi Coalfields Ltd (MCL) and the Central Coalfields Ltd (CCL). Some of the ECL mines faced quality issues. At MCL, accidents delayed normal operations besides a day’s State-sponsored bandh which suspended loading of 40 rakes in the Talcher mines. As a result, the monthly average fell by 1.3 rakes. Also, several days of bandhs observed by the Maoists hit operations in several CCL mines.

Coal India is keen on stepping up loading in April and May before the monsoon breaks out in June. After that, normal production as well as loading will be hit at least for four months till September. Then there are festival seasons. To make up for this loss in production and offtake, daily average loading in the remaining months, especially in the second half, has to be substantially higher than the targeted average for the whole year. This poses a real challenge.

“In 2012-13, we achieved a daily loading average of 186 rakes for the year as a whole despite the monthly average of 220 rakes a day in January and March,” Rao said. “If we’re to achieve the targeted daily average of 212 rakes for the whole of the current fiscal, our daily average between January and March has to be significantly higher than the last year’s daily average in these months and that is going to be a tough job.”

The CIL chairman emphasises that the demands of all coal consumers with whom an FSA (fuel supply agreement) or an MOU (Memorandum of Understanding) has been signed will be fully met even if there is a shortfall from the targeted production of 482 million tonnes during the year.

In its bid to step up offtake, the CIL Chairman expects the Railways to play its part. “The beginning has been good,” he observes, pointing out that there was no shortage of rakes in April. He adds, “Coal is the single largest item of traffic for the Railways, accounting for more than 46% of the total. We have a special claim which, I’ve no doubt, the new bosses who will take over in the Railway Board shortly too know well.”

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