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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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Friday, 04 February 22
RENEWABLES ON THE RISE, COAL CONTINUOUSLY FALLING - EUROPEAN COMMISSION
Although oil (34.5%) and natural gas (23.7%) were still the most important fuel sources in the EU energy mix in 2020, renewable energy’s shar ...
Thursday, 03 February 22
COAL SHORTAGE NOW AT ALARMING LEVELS, SAY ALUMINIUM PRODUCERS - IANS
With no relief in sight despite coal stocks running critically low and production disruptions looming across the Indian aluminium sector, the Alumi ...
Wednesday, 02 February 22
HIGH COKING COAL PRICES PROVIDE GLIMPSE INTO STEELMAKING'S FUTURE - MCKINSEY
Last year was a volatile one in global commodity markets. Demand for coking coal, an essential raw material in the production of steel, was extreme ...
Wednesday, 02 February 22
INDONESIA'S RESTRICTIONS ON COMMODITIES RATTLE MARKETS, MORE MOVES LIKELY - REUTERS
In just the first month of this year, Indonesian policymakers have rattled global markets with restrictions on some of its biggest commodities expo ...
Wednesday, 02 February 22
CHINA'S TOP COAL PRODUCER FORECASTS 28 PCT PROFIT GROWTH IN 2021 - XINHUA
China Shenhua Energy Company Limited, one of the country’s biggest coal producers, said its net profits are expected to jump by 28 percent in ...
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- Aditya Birla Group - India
- Chamber of Mines of South Africa
- Bank of Tokyo Mitsubishi UFJ Ltd
- Latin American Coal - Colombia
- PTC India Limited - India
- Planning Commission, India
- London Commodity Brokers - England
- Baramulti Group, Indonesia
- Jaiprakash Power Ventures ltd
- Vizag Seaport Private Limited - India
- Mercuria Energy - Indonesia
- Mintek Dendrill Indonesia
- Central Electricity Authority - India
- Australian Commodity Traders Exchange
- Cement Manufacturers Association - India
- Sojitz Corporation - Japan
- Anglo American - United Kingdom
- Marubeni Corporation - India
- Central Java Power - Indonesia
- Essar Steel Hazira Ltd - India
- Directorate Of Revenue Intelligence - India
- Parliament of New Zealand
- India Bulls Power Limited - India
- Jindal Steel & Power Ltd - India
- Deloitte Consulting - India
- Bangladesh Power Developement Board
- Petron Corporation, Philippines
- Minerals Council of Australia
- Leighton Contractors Pty Ltd - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- AsiaOL BioFuels Corp., Philippines
- CNBM International Corporation - China
- Oldendorff Carriers - Singapore
- Wilmar Investment Holdings
- Offshore Bulk Terminal Pte Ltd, Singapore
- PowerSource Philippines DevCo
- Sindya Power Generating Company Private Ltd
- Altura Mining Limited, Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Siam City Cement - Thailand
- Port Waratah Coal Services - Australia
- Africa Commodities Group - South Africa
- OPG Power Generation Pvt Ltd - India
- Power Finance Corporation Ltd., India
- Billiton Holdings Pty Ltd - Australia
- Ministry of Finance - Indonesia
- Banpu Public Company Limited - Thailand
- Formosa Plastics Group - Taiwan
- Singapore Mercantile Exchange
- Energy Development Corp, Philippines
- New Zealand Coal & Carbon
- Energy Link Ltd, New Zealand
- The University of Queensland
- MS Steel International - UAE
- Australian Coal Association
- Dalmia Cement Bharat India
- International Coal Ventures Pvt Ltd - India
- Xindia Steels Limited - India
- South Luzon Thermal Energy Corporation
- Tata Chemicals Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Intertek Mineral Services - Indonesia
- Parry Sugars Refinery, India
- Electricity Authority, New Zealand
- Iligan Light & Power Inc, Philippines
- Madhucon Powers Ltd - India
- Commonwealth Bank - Australia
- Indogreen Group - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Miang Besar Coal Terminal - Indonesia
- Simpson Spence & Young - Indonesia
- White Energy Company Limited
- Meenaskhi Energy Private Limited - India
- Wood Mackenzie - Singapore
- IHS Mccloskey Coal Group - USA
- Kartika Selabumi Mining - Indonesia
- Kumho Petrochemical, South Korea
- Sical Logistics Limited - India
- Antam Resourcindo - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Bukit Baiduri Energy - Indonesia
- Barasentosa Lestari - Indonesia
- Savvy Resources Ltd - HongKong
- Kideco Jaya Agung - Indonesia
- Indian Oil Corporation Limited
- Standard Chartered Bank - UAE
- Toyota Tsusho Corporation, Japan
- Samtan Co., Ltd - South Korea
- McConnell Dowell - Australia
- Global Business Power Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- PetroVietnam Power Coal Import and Supply Company
- Videocon Industries ltd - India
- European Bulk Services B.V. - Netherlands
- Medco Energi Mining Internasional
- VISA Power Limited - India
- Karaikal Port Pvt Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Metalloyd Limited - United Kingdom
- Bharathi Cement Corporation - India
- Bayan Resources Tbk. - Indonesia
- Mercator Lines Limited - India
- IEA Clean Coal Centre - UK
- Jorong Barutama Greston.PT - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Orica Australia Pty. Ltd.
- Uttam Galva Steels Limited - India
- Orica Mining Services - Indonesia
- LBH Netherlands Bv - Netherlands
- Coal and Oil Company - UAE
- GN Power Mariveles Coal Plant, Philippines
- Eastern Coal Council - USA
- Rio Tinto Coal - Australia
- Krishnapatnam Port Company Ltd. - India
- TeaM Sual Corporation - Philippines
- Global Green Power PLC Corporation, Philippines
- Edison Trading Spa - Italy
- Heidelberg Cement - Germany
- Indo Tambangraya Megah - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Trasteel International SA, Italy
- Bulk Trading Sa - Switzerland
- Vedanta Resources Plc - India
- Romanian Commodities Exchange
- SMG Consultants - Indonesia
- Aboitiz Power Corporation - Philippines
- Meralco Power Generation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Maheswari Brothers Coal Limited - India
- Ministry of Transport, Egypt
- Posco Energy - South Korea
- Sarangani Energy Corporation, Philippines
- Electricity Generating Authority of Thailand
- GVK Power & Infra Limited - India
- Eastern Energy - Thailand
- Kaltim Prima Coal - Indonesia
- Borneo Indobara - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Sakthi Sugars Limited - India
- Mjunction Services Limited - India
- GAC Shipping (India) Pvt Ltd
- Independent Power Producers Association of India
- Straits Asia Resources Limited - Singapore
- Global Coal Blending Company Limited - Australia
- Semirara Mining Corp, Philippines
- Globalindo Alam Lestari - Indonesia
- Merrill Lynch Commodities Europe
- Tamil Nadu electricity Board
- Vijayanagar Sugar Pvt Ltd - India
- Carbofer General Trading SA - India
- SMC Global Power, Philippines
- Price Waterhouse Coopers - Russia
- PNOC Exploration Corporation - Philippines
- Salva Resources Pvt Ltd - India
- San Jose City I Power Corp, Philippines
- ASAPP Information Group - India
- Sree Jayajothi Cements Limited - India
- Siam City Cement PLC, Thailand
- Goldman Sachs - Singapore
- Renaissance Capital - South Africa
- Cigading International Bulk Terminal - Indonesia
- Riau Bara Harum - Indonesia
- Sinarmas Energy and Mining - Indonesia
- SN Aboitiz Power Inc, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Grasim Industreis Ltd - India
- Bhushan Steel Limited - India
- Ceylon Electricity Board - Sri Lanka
- Coalindo Energy - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Economic Council, Georgia
- Attock Cement Pakistan Limited
- CIMB Investment Bank - Malaysia
- Indika Energy - Indonesia
- Malabar Cements Ltd - India
- Indonesian Coal Mining Association
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Larsen & Toubro Limited - India
- Ind-Barath Power Infra Limited - India
- ICICI Bank Limited - India
- Thai Mozambique Logistica
- The Treasury - Australian Government
- Bahari Cakrawala Sebuku - Indonesia
- Gujarat Sidhee Cement - India
- Bhatia International Limited - India
- Lanco Infratech Ltd - India
- Bhoruka Overseas - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Kobexindo Tractors - Indoneisa
- Holcim Trading Pte Ltd - Singapore
- Agrawal Coal Company - India
- Timah Investasi Mineral - Indoneisa
- Maharashtra Electricity Regulatory Commission - India
- Pendopo Energi Batubara - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Ambuja Cements Ltd - India
- Kepco SPC Power Corporation, Philippines
- The State Trading Corporation of India Ltd
- Thiess Contractors Indonesia
- Makarim & Taira - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Georgia Ports Authority, United States
- Ministry of Mines - Canada
- Karbindo Abesyapradhi - Indoneisa
- Coastal Gujarat Power Limited - India
- Chettinad Cement Corporation Ltd - India
- Therma Luzon, Inc, Philippines
- Interocean Group of Companies - India
- Indian Energy Exchange, India
- Binh Thuan Hamico - Vietnam
- Petrochimia International Co. Ltd.- Taiwan
- Star Paper Mills Limited - India
- Manunggal Multi Energi - Indonesia
- Bukit Makmur.PT - Indonesia
- GMR Energy Limited - India
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