Coal news and updates

India’s coal imports to slow down - CIL

In a dramatic shift in the demand/supply dynamics of thermal power producers, India is unlikely to resort to imports of coal in the immediate short term.

In the aftermath of excess coal stocks at thermal power plants and low plant load factors ranging between 60% and 65%, coal producer Coal India Limited (CIL) would not be importing five-million tonnes of coal, as planned during 2013/14.

About ten thermal power plants across the country, with aggregate generating capacity of 15 200 MW have stopped lifting coal from CIL, forcing the miner to adjust production levels even though it has missed total monthly and annual production targets.

“CIL is now faced with falling short of targets and now with depletion in demand, the gap between production and target will increase,” CIL chairperson S Narsing Rao said.

“Ground stocks are comfortable at 40-million tonnes for February and CIL is ideally in a position to ramp up supplies to meet offtake targets. But with lower power demand in many provinces and coal stocks brimming over at power plants, offtake has been further dampened,” he said.

Thermal power producers were liable to pay a penalty to CIL for failure to lift coal stocks as per fuel supply agreements. But considering high coal stocks and the costs of carrying large fuel inventories, thermal power producers were willing to pay the penalty.

However, at the same time, CIL was not too keen to strictly adhere to the penalty clause and strictly realise the same from power producers in the interest of long-term relationships, a CIL official said.

Last year, CIL had decided to import five-million tonnes of coal by the end of March. However, a tender seeking an importer of coal did not elicit any response. In response to the second tender floated, government-owned trading house, MMTC was the sole bidder; however, the import contract was unlikely to be concluded in the next few months, considering the substantial fall in demand over the past few months and high stocks at power plants, the official said.

According to government estimates, total Indian coal imports during 2013/14 would touch around 149-million tonnes, up from 138-million tonnes in the previous year. But the growth rate in imports were expected to fall substantially in the next fiscal period in view of a slowdown in the economy, a fall in the generation capacity of power plants, and financial distress at several power distribution companies preventing them from increasing power purchase from generating companies.

Source: www.miningweekly.com