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Tuesday, 19 October 21
COAL INDIA, THE FALL GUY FOR POWER CRISIS - INDIA EXPRESS
The post-Covid economic recovery has led to a major increase in the demand for power, both in India and globally. In India, coal-based power plants have witnessed rapid depletion of coal stocks from a comfortable 28 days at the end of March to a precarious level of four days by the end of September. The country is struggling to understand how the crisis is likely to pan out in the near future. Coal India Ltd (CIL) has been unfairly attacked, even as it gears up to play a crucial role in fighting the power crisis.
The reasons for the crisis are not hard to find. These are structural as well as operational. A government-appointed committee in the early 1990s concluded that CIL “cannot be expected to meet the demand of the power sector, in case the pace of capacity addition accelerates.” This led to an amendment in the Coal Mines Nationalisation Act (CMNA) in 1993 that enabled the government to take away 200 coal blocks of 28 billion tons from CIL and allocate them to end-users for the captive mining of coal. These end-users, mostly in the private sector, failed to produce any significant quantity of coal to meet the rapidly rising power capacity between 2007 and 2016. The cancellation of 214 blocks by the Supreme Court added to the problem.
Commensurate to the captive mines allocated to the end-user industries, the coal production today should have been at least 500 million tonnes per annum (mtpa). In reality, this has never exceeded 60 mtpa. CIL, with denuded reserves, is called to meet the rising gap in coal supplies. These structural factors fuelled not just over-expectations from CIL, they also kept the company in a constant state of stress.
On the operational side, power plants are required by the Central Electricity Authority (CEA) to maintain a minimum stock of 15 to 30 days of normative coal consumption, depending upon the distance of the plant from the source of coal. The compliance with this directive by power plants has been severely lacking. This enhances the vulnerability of power plants, particularly those at longer distances, to supply constraints on account of the coal producer or transporter.
The persistent non-payment of coal sale dues by power plants to coal companies has created a serious strain on their working capital position. Some companies were forced to borrow from banks to meet the operational expenses, including disbursement of salaries. According to reports, Rs 18,000 crore is currently due to coal producers.
The persistent shortage of coal production by the privatised and captive mines forced India to import around 200 million tonnes (mt) of coal. Of this, more than 40 per cent goes to meet the demands of power plants. A spurt in imported coal prices, mainly due to a major increase in coal imports by China, acted as a brake on imports of coal. This escalated the demand for domestic coal.
Simultaneously, from August, the demand for thermal power witnessed a sudden rise after stagnating for over three years. The spurt in demand for coal is being linked to the post-Covid economic recovery. In the short run, the coal production by CIL has faced severe headwinds in the first quarter due to the second wave of the pandemic. Thousands of workers and officers were infected and hospitalised and more than 250 CIL employees lost their lives. In the second quarter, the extended monsoon severely affected open-cast mining. These added to supply disruptions and aggravated the crisis.
Despite so many constraining factors, it is to the credit of CIL that it has achieved a growth of 14 million tonnes (mt) or 5.8 per cent in coal production during the first half of 2021-22. Yet, the offtake was higher than the preceding year by 52 mt or 20.6 per cent. This was possible by drawing down on the opening inventory of coal from 100 mt to 42 mt during April to September.
With the monsoons behind us and the onset of a good productive season, CIL has already stepped up coal offtake to more than 1.5 mt per day. It is expected to rise further to 1.6/1.7 mt in the next few weeks. With these efforts, supply will match, if not exceed consumption. With efforts on the part of the railways in moving the coal, the crisis should dissipate in the near future, at least for power plants that pay timely for coal supplies. Obviously, it will take a few months for coal stock at power plants to climb to comfortable levels in line with the CEA’s norms.
Besides meeting the growing coal demand of power plants, CIL has been able to significantly replace the import of highly expensive thermal coal. Even after bearing the highest tax and transport cost globally, the landed cost of CIL coal continues to be much cheaper than imported coal at almost all destinations. The resultant benefits are savings of foreign exchange, and generation of power at affordable tariffs. The coal price charged by CIL, expressed in energy units, is at a deep discount of 60-70 per cent of imported coal.
In brief, CIL has been unfairly blamed for the coal crisis. It has played a stellar role, standing like a solid rock between light and darkness. It is striving to build comfortable stocks at the power plants, not in default of payment. The company has ramped up coal production despite the 1990s policy that took away coal blocks of 28 billion tonnes of reserves. It is time that the country recognises the critical role of CIL. It needs bouquets rather than brickbats.
Source: The India Express
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Monday, 04 July 22
INDONESIAN COAL PRICE REFERENCE SLIGHTLY DOWN IN JULY
COALspot.com: Indonesian Coal Price Reference for July delivery drops 1.52 per cent month on month.
The Indonesian Coal Price Refere ...
Sunday, 03 July 22
CHINESE VICE PREMIER STRESSES CLEAN, EFFICIENT USE OF COAL - XINHUA
Chinese Vice Premier Han Zheng has stressed efforts to promote the clean and efficient use of coal, and pursue green, low-carbon and high-quality d ...
Sunday, 03 July 22
SOVEREIGN SECTOR OUTLOOK REVISED TO NEUTRAL ON UKRAINE WAR IMPACT - FITCH RATINGS
The deterioration in global sovereign credit conditions this year relative to our expectations at end-2021 has caused Fitch Ratings to change its g ...
Saturday, 02 July 22
GLOBAL SEABORNE COAL EXPORTS IN 2021 INCREASED BY 4.4% Y-O-Y TO 1147 MLN TONNES - BANCHERO COSTA
In the full 12 months of 2021, global seaborne coal exports increased by +4.4% y-o-y to 1147 mln tonnes, from 1099 mln tonnes in 2020, according to ...
Friday, 01 July 22
INDIA'S TOP CEMENT MAKER PAYING FOR RUSSIAN COAL IN CHINESE YUAN - REUTERS
India’s biggest cement producer, UltraTech Cement ULTC.NS, is importing a cargo of Russian coal and paying using Chinese yuan, according to a ...
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- Vizag Seaport Private Limited - India
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- Grasim Industreis Ltd - India
- Kideco Jaya Agung - Indonesia
- Kaltim Prima Coal - Indonesia
- Bharathi Cement Corporation - India
- Timah Investasi Mineral - Indoneisa
- Vedanta Resources Plc - India
- The Treasury - Australian Government
- Directorate General of MIneral and Coal - Indonesia
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- Goldman Sachs - Singapore
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- Eastern Energy - Thailand
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- Australian Commodity Traders Exchange
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- Indian Oil Corporation Limited
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- European Bulk Services B.V. - Netherlands
- Minerals Council of Australia
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- Wood Mackenzie - Singapore
- Coal and Oil Company - UAE
- Bukit Makmur.PT - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kumho Petrochemical, South Korea
- London Commodity Brokers - England
- Eastern Coal Council - USA
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- Central Electricity Authority - India
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- Kohat Cement Company Ltd. - Pakistan
- Indian Energy Exchange, India
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- Bhatia International Limited - India
- Economic Council, Georgia
- Maharashtra Electricity Regulatory Commission - India
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- Energy Development Corp, Philippines
- Mercuria Energy - Indonesia
- Bangladesh Power Developement Board
- Tamil Nadu electricity Board
- Trasteel International SA, Italy
- Kapuas Tunggal Persada - Indonesia
- Sinarmas Energy and Mining - Indonesia
- New Zealand Coal & Carbon
- VISA Power Limited - India
- Parliament of New Zealand
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- Electricity Generating Authority of Thailand
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- PowerSource Philippines DevCo
- Larsen & Toubro Limited - India
- Bulk Trading Sa - Switzerland
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- Semirara Mining Corp, Philippines
- South Luzon Thermal Energy Corporation
- Price Waterhouse Coopers - Russia
- Savvy Resources Ltd - HongKong
- Neyveli Lignite Corporation Ltd, - India
- Chamber of Mines of South Africa
- Petron Corporation, Philippines
- Thiess Contractors Indonesia
- Jindal Steel & Power Ltd - India
- Ambuja Cements Ltd - India
- Interocean Group of Companies - India
- GAC Shipping (India) Pvt Ltd
- Thai Mozambique Logistica
- Sical Logistics Limited - India
- Banpu Public Company Limited - Thailand
- Posco Energy - South Korea
- MS Steel International - UAE
- Xindia Steels Limited - India
- Georgia Ports Authority, United States
- Central Java Power - Indonesia
- Kobexindo Tractors - Indoneisa
- GMR Energy Limited - India
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- Bhoruka Overseas - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Cement Manufacturers Association - India
- Toyota Tsusho Corporation, Japan
- IHS Mccloskey Coal Group - USA
- Global Coal Blending Company Limited - Australia
- CNBM International Corporation - China
- Gujarat Electricity Regulatory Commission - India
- Binh Thuan Hamico - Vietnam
- PTC India Limited - India
- Rio Tinto Coal - Australia
- Port Waratah Coal Services - Australia
- Orica Australia Pty. Ltd.
- Parry Sugars Refinery, India
- Latin American Coal - Colombia
- Aboitiz Power Corporation - Philippines
- McConnell Dowell - Australia
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- Manunggal Multi Energi - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Coalindo Energy - Indonesia
- Merrill Lynch Commodities Europe
- Ministry of Mines - Canada
- ICICI Bank Limited - India
- Standard Chartered Bank - UAE
- Therma Luzon, Inc, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Krishnapatnam Port Company Ltd. - India
- Leighton Contractors Pty Ltd - Australia
- SMG Consultants - Indonesia
- Deloitte Consulting - India
- San Jose City I Power Corp, Philippines
- Bhushan Steel Limited - India
- Orica Mining Services - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Globalindo Alam Lestari - Indonesia
- Mercator Lines Limited - India
- Metalloyd Limited - United Kingdom
- Mjunction Services Limited - India
- Siam City Cement PLC, Thailand
- IEA Clean Coal Centre - UK
- Sojitz Corporation - Japan
- Straits Asia Resources Limited - Singapore
- Ministry of Transport, Egypt
- Samtan Co., Ltd - South Korea
- Siam City Cement - Thailand
- Anglo American - United Kingdom
- Karaikal Port Pvt Ltd - India
- Africa Commodities Group - South Africa
- Sree Jayajothi Cements Limited - India
- The State Trading Corporation of India Ltd
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- Indogreen Group - Indonesia
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- Global Business Power Corporation, Philippines
- Gujarat Sidhee Cement - India
- Independent Power Producers Association of India
- India Bulls Power Limited - India
- Carbofer General Trading SA - India
- Indonesian Coal Mining Association
- Formosa Plastics Group - Taiwan
- Sindya Power Generating Company Private Ltd
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- Tata Chemicals Ltd - India
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- Asia Pacific Energy Resources Ventures Inc, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Aditya Birla Group - India
- Makarim & Taira - Indonesia
- Meenaskhi Energy Private Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Malabar Cements Ltd - India
- Ministry of Finance - Indonesia
- Lanco Infratech Ltd - India
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- Edison Trading Spa - Italy
- Pipit Mutiara Jaya. PT, Indonesia
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- Dong Bac Coal Mineral Investment Coporation - Vietnam
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