Coal supply to power plants may remain tight for two years: KPMG

30th April 2018

Coal supply position for thermal power plants is expected to remain tight for about two years, after which new railway links will help ease the situation.

“Demand for coal is expected to outpace domestic supplies beyond 2020 keeping supply position tight,” said Niladri Bhattacharjee, partner, strategy & operations for mining and metals at KPMG in India. “A few critical railways projects under construction are expected to be operational after 2020, which would help ease the tight supply position.”

The government’s push for rural electrification is also expected to add to power demand that will exert supply pressure on coal.

A senior Coal India executive said logistics was the key issue. “We can supply as much coal as the industry requires, provided logistics permits. While we have allowed consumers to pick up coal through roadways, new railway tracks that are expected to be operational in the next few years will help liquidate large quantity of coal as and when they come up.”

Jayanta Roy, senior VP, group head, corporate sector ratings at ICRA said: “Coal requirement propelled by rising demand for power is expected to be better since certain sectors are on a recovery path. If that happens, demand for coal would rise and supplies are expected to be tight.” He said CIL production target for FY18 was set at 630 mt, later reset to 600 mt and the company ended up producing 567 mt.

Source: THE ECONOMIC TIMES