Coal India likely to get a five-year breather on production target

27th aug 2018

Faced with multiple challenges on both production and evacuation of supply to power plants, government behemoth Coal India (CIL) might get a five-year breather for the ambitious one billion tonnes a year production target by 2020, given to it in 2015.

That would have nearly eliminated dependence on thermal coal import. However, CIL’s output last year was no more than 567.4 million tonnes (mt), a bit more than half-way through.

CIL officials, previously enthusiastic on meeting the coal ministry’s vision, are now terming the given targets “aspirational”. And, talk of “producing as per demand”.

A key concern for Coal India is logistical bottlenecks at remote mines and availability/loading of railway rakes. A document the company adopted in this regard had named railway links and wagon availability as a primary concern, needing to be addressed. Synergy and unified effort from Coal India, the railways and coal-bearing states, it had said, was crucial to meeting the 1-bn tonnes yearly target marred by low coal availability at central government-owned power plants, against a target of loading 247 tail rakes a day, Coal India loaded 229.2. Three of its subsidiaries — Eastern Coalfields (ECL), Northern Coalfields and Western Coalfields – outdid their targets. However, two crucial entities — Mahanadi Coalfields (MCL) and South-Eastern Coalfields — missed their target by seven and 15.4 per cent, respectively. And, year-on-year, rake loading for these two subsidiaries declined by 1.1 per cent and 0.5 per cent, respectively.

As for production, CIL has been consistently missing the targets prescribed by the government. In 2017-18, it missed the 600 mt one by 5.4 per cent. In 2016-17, the 598.6 mt one was missed by 7.4 per cent. In the current financial year, it has been trailing by nine per cent.

There is less productivity due to a labour-intensive mining process, lack of productive mines, refrainment from underground mining and lack of adequate mechanisation. Also, CIL officials have been complaining about law and order at the areas under MCL, ECL, Central Coalfields and Bharat Coking Coal, saying it is a “matter of concern and affecting production”. Also, power supply was hit during 2016-17 as demand fell. “The situation in 2016-17 was (a consequent) lack of coal demand. Now, when thermal power plants are facing excessive generation pressure, coal demand has surged suddenly,” a CIL official said.

According to Girishkumar Kadam, sector head at ratings agency ICRA, the demand for power in 2015-17 grew by only three to four per cent annually, below the long-term average of six per cent.

Source: BUSINESS STANDARD