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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, 21 January 22
CHINA'S POWER TRADING TARIFFS TO RISE IN 2022 - FITCH RATINGS
Rising trading volume and higher-than-benchmark tariffs in the 2022 bilateral contracts signed between Chinese power generation companies (gencos) ...
Thursday, 20 January 22
CHINESE COAL JUMPS OVER 6% ON PRE-HOLIDAY SUPPLY WORRY - REUTERS
China’s thermal coal futures soared more than 6% on Wednesday, hitting a level last seen in late November as investors grew concerned over ti ...
Thursday, 20 January 22
VIETNAM: COAL SECTOR SEES POSITIVE PROSPECT IN 2022 - VNA
With many signs of rising demand for coal in various economic sectors in 2022, the Vietnam National Coal – Mineral Industries Group (Vinacomi ...
Wednesday, 19 January 22
MARKET INSIGHT - INTERMODAL
Since the beginning of the year, we have been witnessing the BDI correcting downwards with sizable drops across all segments. Latest similar levels ...
Sunday, 09 January 22
INDONESIA MINISTER SAYS 'EMERGENCY OVER' ON COAL SUPPLY CRUNCH - REUTERS
Indonesia’s power emergency which has triggered a coal export ban is over but the government will still continue to discuss policies in this ...
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- Indonesian Coal Mining Association
- Global Coal Blending Company Limited - Australia
- Xindia Steels Limited - India
- Ministry of Transport, Egypt
- Sinarmas Energy and Mining - Indonesia
- Deloitte Consulting - India
- Wood Mackenzie - Singapore
- Bahari Cakrawala Sebuku - Indonesia
- The Treasury - Australian Government
- Global Business Power Corporation, Philippines
- Thai Mozambique Logistica
- Karaikal Port Pvt Ltd - India
- Gujarat Sidhee Cement - India
- TNB Fuel Sdn Bhd - Malaysia
- LBH Netherlands Bv - Netherlands
- Thiess Contractors Indonesia
- Australian Commodity Traders Exchange
- Bangladesh Power Developement Board
- Bukit Makmur.PT - Indonesia
- Sindya Power Generating Company Private Ltd
- Coalindo Energy - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Essar Steel Hazira Ltd - India
- Mercuria Energy - Indonesia
- Indo Tambangraya Megah - Indonesia
- Iligan Light & Power Inc, Philippines
- Coal and Oil Company - UAE
- Minerals Council of Australia
- Commonwealth Bank - Australia
- Gujarat Electricity Regulatory Commission - India
- Simpson Spence & Young - Indonesia
- PTC India Limited - India
- India Bulls Power Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Altura Mining Limited, Indonesia
- Trasteel International SA, Italy
- Meralco Power Generation, Philippines
- New Zealand Coal & Carbon
- Bulk Trading Sa - Switzerland
- GMR Energy Limited - India
- Kepco SPC Power Corporation, Philippines
- Ceylon Electricity Board - Sri Lanka
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bhushan Steel Limited - India
- Kartika Selabumi Mining - Indonesia
- Directorate Of Revenue Intelligence - India
- Manunggal Multi Energi - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Mercator Lines Limited - India
- Vizag Seaport Private Limited - India
- Grasim Industreis Ltd - India
- Globalindo Alam Lestari - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- South Luzon Thermal Energy Corporation
- Kobexindo Tractors - Indoneisa
- Agrawal Coal Company - India
- Billiton Holdings Pty Ltd - Australia
- Georgia Ports Authority, United States
- Indika Energy - Indonesia
- Intertek Mineral Services - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Indian Oil Corporation Limited
- Petrochimia International Co. Ltd.- Taiwan
- Indian Energy Exchange, India
- Bukit Baiduri Energy - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Kapuas Tunggal Persada - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Uttam Galva Steels Limited - India
- Central Electricity Authority - India
- Therma Luzon, Inc, Philippines
- Electricity Authority, New Zealand
- Global Green Power PLC Corporation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Madhucon Powers Ltd - India
- Indogreen Group - Indonesia
- Vedanta Resources Plc - India
- Parry Sugars Refinery, India
- Bhatia International Limited - India
- European Bulk Services B.V. - Netherlands
- Anglo American - United Kingdom
- Medco Energi Mining Internasional
- Wilmar Investment Holdings
- SMC Global Power, Philippines
- Tamil Nadu electricity Board
- Cigading International Bulk Terminal - Indonesia
- Independent Power Producers Association of India
- Romanian Commodities Exchange
- SN Aboitiz Power Inc, Philippines
- Sree Jayajothi Cements Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Mintek Dendrill Indonesia
- Jaiprakash Power Ventures ltd
- Directorate General of MIneral and Coal - Indonesia
- McConnell Dowell - Australia
- Timah Investasi Mineral - Indoneisa
- Energy Development Corp, Philippines
- Ambuja Cements Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Bharathi Cement Corporation - India
- Kumho Petrochemical, South Korea
- Bhoruka Overseas - Indonesia
- Sarangani Energy Corporation, Philippines
- Orica Australia Pty. Ltd.
- Mjunction Services Limited - India
- Ministry of Finance - Indonesia
- Rio Tinto Coal - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- The University of Queensland
- Antam Resourcindo - Indonesia
- Metalloyd Limited - United Kingdom
- PowerSource Philippines DevCo
- ICICI Bank Limited - India
- Star Paper Mills Limited - India
- Eastern Energy - Thailand
- MS Steel International - UAE
- Heidelberg Cement - Germany
- Krishnapatnam Port Company Ltd. - India
- Interocean Group of Companies - India
- Australian Coal Association
- Miang Besar Coal Terminal - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Gujarat Mineral Development Corp Ltd - India
- Larsen & Toubro Limited - India
- Toyota Tsusho Corporation, Japan
- Edison Trading Spa - Italy
- Leighton Contractors Pty Ltd - Australia
- Riau Bara Harum - Indonesia
- Sical Logistics Limited - India
- San Jose City I Power Corp, Philippines
- Standard Chartered Bank - UAE
- Price Waterhouse Coopers - Russia
- Siam City Cement - Thailand
- Savvy Resources Ltd - HongKong
- Coastal Gujarat Power Limited - India
- Semirara Mining Corp, Philippines
- ASAPP Information Group - India
- Dalmia Cement Bharat India
- Singapore Mercantile Exchange
- Oldendorff Carriers - Singapore
- GAC Shipping (India) Pvt Ltd
- Meenaskhi Energy Private Limited - India
- Marubeni Corporation - India
- Economic Council, Georgia
- Binh Thuan Hamico - Vietnam
- Neyveli Lignite Corporation Ltd, - India
- Africa Commodities Group - South Africa
- Eastern Coal Council - USA
- Samtan Co., Ltd - South Korea
- GN Power Mariveles Coal Plant, Philippines
- Formosa Plastics Group - Taiwan
- AsiaOL BioFuels Corp., Philippines
- Aditya Birla Group - India
- Bayan Resources Tbk. - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Barasentosa Lestari - Indonesia
- White Energy Company Limited
- Bank of Tokyo Mitsubishi UFJ Ltd
- IHS Mccloskey Coal Group - USA
- Pipit Mutiara Jaya. PT, Indonesia
- Cement Manufacturers Association - India
- PNOC Exploration Corporation - Philippines
- GVK Power & Infra Limited - India
- Pendopo Energi Batubara - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Kideco Jaya Agung - Indonesia
- London Commodity Brokers - England
- Jorong Barutama Greston.PT - Indonesia
- Merrill Lynch Commodities Europe
- Maheswari Brothers Coal Limited - India
- Central Java Power - Indonesia
- Attock Cement Pakistan Limited
- Orica Mining Services - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Straits Asia Resources Limited - Singapore
- International Coal Ventures Pvt Ltd - India
- Baramulti Group, Indonesia
- Electricity Generating Authority of Thailand
- Parliament of New Zealand
- Videocon Industries ltd - India
- Energy Link Ltd, New Zealand
- Salva Resources Pvt Ltd - India
- Posco Energy - South Korea
- Sojitz Corporation - Japan
- Renaissance Capital - South Africa
- Petron Corporation, Philippines
- SMG Consultants - Indonesia
- Makarim & Taira - Indonesia
- Borneo Indobara - Indonesia
- Ind-Barath Power Infra Limited - India
- Kaltim Prima Coal - Indonesia
- Carbofer General Trading SA - India
- Ministry of Mines - Canada
- IEA Clean Coal Centre - UK
- OPG Power Generation Pvt Ltd - India
- Aboitiz Power Corporation - Philippines
- Goldman Sachs - Singapore
- Tata Chemicals Ltd - India
- Malabar Cements Ltd - India
- Latin American Coal - Colombia
- TeaM Sual Corporation - Philippines
- Sakthi Sugars Limited - India
- VISA Power Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Lanco Infratech Ltd - India
- Jindal Steel & Power Ltd - India
- Power Finance Corporation Ltd., India
- CIMB Investment Bank - Malaysia
- Siam City Cement PLC, Thailand
- CNBM International Corporation - China
- Planning Commission, India
- The State Trading Corporation of India Ltd
- Holcim Trading Pte Ltd - Singapore
- Banpu Public Company Limited - Thailand
- Port Waratah Coal Services - Australia
- Chamber of Mines of South Africa
- Chettinad Cement Corporation Ltd - India
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