Coal news and updates

It has been a bad year for Coal India as fuel sales remained flat in the April-August period, sending profits on a tailspin. To survive the slowdown, the miner is looking to substitute imports in the power sector.

 

Behind the project is the rising price of imported coal since February, widening the price gap with domestic coal.

 

According to the “India Coal Market Watch” of mjunction, popular import varieties from South Africa (5,500 kcal) and Indonesia (4,200 kcal) have become costlier by 5.5 per cent and 19 per cent respectively over the past 45 days. Import of thermal coal is down 12 per cent this fiscal.

 

Imported coal is used in power generation for two purposes. While the plants in the hinterland use limited quantities of these for blending, to meet emission standards; coastal power plants (away from the mining zone) run on low quality imported fuel for its freight advantage.

 

Hinterland imports

CIL is now planning to replace both the demands, partly or fully. While it is now flush with low-calorific value coal, the limited quantities of high value coal available in Ranigunj in West Bengal and Korea Rewa in Chattisgarh — which did not find too many takers in the past — can be used for blending.

 

To make it workable CIL will make Railways and port authorities party to the negotiation so that coal can be reached to these consumers at a lower price than the imported coal.

 

Considering India’s inefficient transportation infrastructure that (along with taxes) makes landed cost of fuel nearly two times costlier than the price of coal, the practical aspects of this proposal are yet to be tested.

 

But to some extent, it has already started happening — NTPC and Neyveli Lignite have stopped issuing fresh import orders. This will replace nearly 17-18 million tonne of import demand beginning the second half of FY17.

 

NDA-ruled hinterland States such as Chattishgarh, Punjab, Haryana and Madhya Pradesh have stopped issuing fresh import orders, too. Last year hinterland States consumed 37 million tonnes of imported fuel.

Source: THe Hindu