Coal news and updates

CMA seeks Prabhu’s mediation on Korba coal supplies

January 16: The Cement Manufacturers Association of India (CMA), in a communication to Railways Minister Suresh Prabhu has sought his intervention with regard to the acute shortage of coal being faced since April 2014 due to non-supply and non-loading of rakes from the Korba coalfields of South Eastern Coalfields (SECL) – which fall under SEC Railway, Bilaspur, as well as non-supply of rakes at the ports.

The CMA has further said that if the supplies from Korba are not restored immediately, this will lead to closure of the cement plants (and their captive power plants), already saddled with idle capacity of more than 30%.

In order to resolve the issue, the CMA and cement company representatives had been advised to participate in the Rail Coal meeting held in Kolkata on November 25, 2014.

Post this, the Railway Board had even advised SECL to “offer and load” two additional rakes daily for the cement industry from Korba, to clear the huge arrears.

Unfortunately, the communique points out that, despite the above directive, the position had not improved, rather declined in December 2014. As against 136 box wagons per day in November 2014, the daily average loading in December had come down to 118, while over April-November, 2014 the total number of coal rakes for the cement industry pending for movement from the Korea-Rewa and Korba coalfields of SECL are 260, the letter said.

Coupled with the 10% hike in freight rates from ports the cement sector is in a bind.

“No allotment was given by SEC Railways in June 2014 against the valid rail programme, resulting in lapse of the entire monthly scheduled contracted quantity of the cement sector,” the CMA said in another letter.

Consequently, due to the non-supply and non-loading of rakes, coal stocks at most of the cement plants had reached critical levels. In any case, the CMA reminded, coal supplies against the fuel supply agreements (FSAs) satisfy only 31% of the sector’s fuel requirements.

As per information received by the CMA, in June 2014, allotment of rakes had been granted only to PSU power utilities and independent power producers from the Korba coalfields and none to the cement sector.

In such a scenario, the CMA said, the cement companies are being forced to import coal and pet coke, which involves not only higher costs but huge foreign exchange outgo as well.