Coal news and updates

Coal India to target 20% rise in despatches this year

If everything goes according to plan, Coal India will make history this year, not in production but in despatches.

Historically, CIL has seen a surge in production in isolated years. What is more important, it always had mines that could easily step up production to meet targets set by the Coal Ministry. But such production only added to the inventory in the absence of evacuation facility, primarily rail infrastructure.

Last fiscal too was not an exception. CIL produced 32 million tonnes more fuel, but five million tonnes were added to the inventory. And, the only logical explanation of this wasteful practice (of adding inventories) was non availability of cargo trains (rakes).

The change came in the first quarter of this fiscal when CIL despatched 10 mt, out of nearly 13 mt added production, to the consumers. Rail despatches that generally grow by 4-5 per cent a year, grew by a staggering 11 per cent between April and June 2015 compared to the last fiscal.

It means, the share of railways in despatching coal that was stagnant at 50 per cent for years is finally moving up. CIL sources say the share may have moved up to 55 per cent in the first quarter.
Ambitious plan

Overall CIL loaded 206 rakes a day in the April-June quarter as against the 194 a day for the entire 2014-15. As against the first quarter of last fiscal, the loading increased by at least 18-20 rakes a day.

On July 3 the company unveiled an ambitious plan to load an average of 234 rakes a day, bringing about nearly 20 per cent jump in rail despatches this year.

Ideally it should be music in the ears of the cash-strapped railways. But the job is easier said than done. Railway capacities are outstretched in major coal producing zones like Odisha and Chhattisgarh.

To resolve the issue the company is trying to even out the loading pattern.

“The rake availability is a zone and season specific issue. For example, more wagons are available in the monsoon months than in the winter. To improve averages we are trying to push more coal in the lean season and from pockets where railways have excess capacity,” an official said.

CIL was successful in pursuing this plan in the first quarter when mining subsidiaries in West Bengal (ECL), Jharkhand (CCL) and Maharashtra (WCL) recorded a significant jump in despatches.

It is now to be seen if the company can maintain the tempo in the crucial July-September quarter when thermal power consumption drops in the face of higher hydel production and lower domestic demand.

Also it is to be seen if the thermal capacities are ready to enhance their capital block by storing more coal in the lean season.

CIL is surely keeping its fingers crossed. But the round-the-clock (RTC) average tariff on power exchanges doesn’t reflect a healthy demand. On July 7, RTC in the southern zone (that pays maximum price for electricity) was barely ₹4 a unit at IEX, well below the generation cost of new thermal facilities. In the industrially developed western and northern zone, the average was as low as ₹2.33 and ₹3.23 a unit.

source: http://www.thehindubusinessline.com