Coal news and updates

Coal demand in India is often underestimated even though the average consumption is much lower than many emerging economies. The fact that there are still a lot of power outages and load-shedding in a number of States means there is latent demand, says Coal Secretary Anil Swarup. The problem is not in the context of fundamental demand of electricity in the country. The problem lies with the State distribution companies which are not in a position to buy power and are unable to meet the demand of the consumers because they are not financially sound to purchase power, he says.

Speaking to BTVi, Anil Swarup says more coal is now made available than what it was in the past few years. Coal India Limited (CIL) had pit head stocks of around 56 million tonnes at the start of this financial year. E-auction of another 20 million tonnes of coal is in the offing in the next few months, he said. Edited excerpts:

You believe a lot of pent-up demand will come in as the per-capita power consumption in the country is much below that of peers like China. Can you elaborate a bit more on this and explain where the demand will come from?

Let’s first understand the existence of coal demand. A lot of outages and load-shedding still happen in a number of States, which means there is demand. The problem is not in the context of fundamental demand of electricity in the country as that itself will grow. The problem lies with the State distribution companies which are not in a position to buy power, and they are unable to meet the demand of the consumers because they are not financially sound to purchase powers. Fundamentally there is demand, but the poor financial health of distribution companies is preventing them from making use of the demand and asking for more power. The PLF (Plant Load Factor) is low as a consequence of that. The capacity is there, the power availability is there, but the consumption is not happening because of the poor financial conditions of the distribution companies.

Do you believe e-auction pricing could see improvement from here on?

The e-auction pricing will depend on demand and supply. Fortunately or unfortunately, depending on where you stand, the e-auction realisation is much lesser than what it was last year. But we are happy in the sense that coal is being made available; and the quantity being made available for e-auction is much more than what we did in the previous few years. The attempt by Coal India is to liquidate the stocks they have. We were sitting on pit head stocks of around 56 million tonnes when this financial year started. It was a record in a way. And if we don’t liquidate them, there would be trouble in terms of a lot of stocks catching fire or decaying. In that sense, Coal India took the step of auctioning huge amounts of coal. E-auction of another 20 million tonnes is in the offing in the next few months.

SOurce:The Hindu Busienss Line