Coal news and updates

No dark summer, record Coal India output ramps up coal stocks at power plants

For a change, power outages may not occur this summer. According to industry sources, unlike in the recent years, most of the country’s power plants are equipped with enough coal stocks to sustain the generation levels required to avert a crisis.

Coal availability with the power sector has improved substantially over the last six months due to the record production levels at Coal India’s (CIL) mines and last year’s double-digit growth in imports of the fuel, they added.

As per the data on the Central Electricity Authority’s website, as on April 8, only 11 power plants were in “critical/super-critical condition” with coal stocks to last less than seven days, compared with 66 in October last year. Of the 11 plants, five had coal stocks that would be used up in less than four days on April 8, to be termed super-critical.

The satisfactory coal stocks with power plants are despite some disruptions at the captive coal mines, which account for a sixth of the country’s total coal output, due to the cancellation of 204 mines by the Supreme Court, leading to their reallocation via  auction.

In early September 2014, the country witnessed a severe power crisis with a a fifth of the country’s power generation capacity being out of service, due to technical glitches and fuel shortages. Peak demand met then was less than half of the installed capacity.

Coal India, which missed its production target for the last fiscal, managed to clock a 7% growth at 494 million tonnes (mt) in FY15, compared to 463 mt in FY14. That was the highest growth in CIL output in about two decades, industry watchers said. The PSU, which still enjoys a monopoly in commercial coal mining, has set a production target of 550 mt for the current fiscal is believed to be on course to meet the target of a billion tonne for FY20.

“Supply-side issues have been resolved somewhat with higher domestic production and increased imports primarily by developers of power plants. This has improved the stock position at thermal power plants despite persisting problems of coal evacuation. Nearly 12 million tonnes of coal is lying at the ports for want of rakes to carry it to designated buyers,” Debasish Misra, Senior Director, Deloitte, told FE.

Increased coal output was the saving grace in the latest core sectors production data. While output contracted in five industries — crude oil, natural gas, refinery products, fertilisers and steel —  in February, leading to a 16-month low growth of 1.4% in the overall core sector production, coal output grew at a three-month high of 11.2% versus 1.7% in January.

Bumped up domestic production has also been augmented by a 20% jump in coal imports to nearly 200 million tonnes in FY15 as power companies added capacity to meet their increased demand. The government, however, estimates that the coal import will go down by 20% to 160 million tonnes for the current fiscal as the state-run miner and private companies are expected to produce more.

Although summer is yet to fully set in due to unseasonal rains in the northern part of the country, industry experts believe that if CIL continues to produce as per its target for the current fiscal, aided by government’s efforts to ease evacuation related concerns, the coal stock position should remain comfortable through the summer.

The central government has got the coal-bearing states to form special purpose vehicle (SPV) with railways and CIL to expedite infrastructure development, including laying rail like tracks and buying more rakes to help evacuate mined coal.

Despite a delayed summer, the peak demand met for February exceeded that of the year earlier by 3% at 130 GW which experts believe is a healthy sign for the month ahead when demand is likely to exceed further compared to last year.

source: http://www.financialexpress.com