Government may revise 1 billion tonne coal production target set for 2020



Source: BLOOMBERG QUINT

The government is likely to revise the production target of Coal India Ltd. as current trend suggests pursuing the projected dry fuel output target of 1 billion tonnes by 2020 may not be warranted.

“We needed to recalibrate how much coal needs to be procured. The country may need between 1.3-1.9 billion tonnes of coal by 2030. We are trying to see what should be the contribution of Coal India, and by when Coal India should produce 1 billion tonnes. So rather than 2020, it will shift to that date,” Susheel Kumar, secretary, Ministry of Coal, told reporters in New Delhi yesterday, at the sidelines of a workshop on the Coal Vision 2030.

Coal India has roped in consultancy firm KPMG to devise a business roadmap plan on ‘Coal vision 2030’. This is at a time when uncertainty looms in the sector and coal demand is subdued. Also, with the big boost on renewables, coal demand is likely to decline going forward.

“It is good news for us that demand has gone up. We can now once again aggressively pursue the 1 billion tonne target. Albeit now 2020 may not have much possibility or meaning, because of the 2 years we lost in between when there was less demand. But we will work out a revised timeframe based on demand,” said Coal Minister Piyush Goyal, who was also present at the event.

Coal India, which accounts for over 80 percent of domestic coal production, had set an ambitious target of 1 billion tonnes by 2020 in 2014. However, the government had in December last year said that of 1.5 billion tonnes the country is expected to produce by 2022 and of this, 1 billion tonnes would come from Coal India. The coal miner produced 567.37 million tonnes of coal in the last financial year that ended March 31, an increase of 2.4 percent, but trailing its target of 600 million tonnes.

When asked whether the government is considering revising the target of 1 billion tonnes of fuel output by the state-owned miner, Coal India Chairman Gopal Singh said, “We had engaged one consultant to work out the exact volume of coal what Coal India is required to produce. They have made the presentation today before all the customers and stakeholders. They have taken the feedback …will just take few days to compile and come out with final numbers.”

“Our target will not shift from 1 billion, only the timeline will be shifted” said Gopal Singh, Chairman, Coal India.

Goyal said there are plans to put out the list of available coal blocks in the public domain and then depending on the interest, the blocks can be auctioned. This idea comes at a time when there have been occasions where coal block auctions did not attract enough demand.

“..just a thought came to me…that we put out all the blocks that are available (in the public domain) and people who are interested will register (for those) they are interested in. We will get to know how many people are interested and if we see that there is an interest in a particular block we will auction,” Goyal said.

Source: BLOOMBERG QUINT