Ramped-up Coal India output saves Rs 25,900 crore in forex

Coal demand expected to remain high

Increased coal production by Coal India in the past three years has substituted coal imports significantly with local produce, resulting in foreign-exchange savings worth Rs 25,900 crore.

At the company’s 43rd annual general meeting, interim chairman Gopal Singh said imports accounted for 25 per cent of the total coal supply in 2015-16, and 23 per cent in 2016-17.

“Energy accounts for around a quarter of the total value of imports in India, making it imperative for the government to fulfil energy needs of the country independently in a sustainable manner,” he said, adding, “coal production has increased substantially in the last three years, resulting in reduction in imports and foreign-exchange savings of Rs 25,900 crore”.

During 2014-15, the company’s coal dispatches stood at 490 million tonnes (mt), which increased to 535 mt in the next financial year, rising further by 1.5 per cent to 543 mt in 2016-17.

Coal imports during 2014-15 stood at 217.78 mt, falling to 199.88 mt in 2015-16. From April 2016 to January 2017, coal imports reduced by 2.59 per cent compared to the corresponding period previous year.

Singh cautioned that imports might remain high unless domestic production picks up at a fast pace. Seeing thermal power-based electricity as central to the country's energy landscape, Singh expects sales volumes to remain healthy owing to demand from power stations.

Coal-based power generation capacity of 125 gigawatt (Gw) in 2012 is likely to become 330-441 Gw by 2040. This year, power generation in the category is going to touch 192 Gw.

“The demand for these plants is likely to be first met by domestic coal, which will require quick exploration of our reserves and call for fuller resource assessment, optimum mining and efficient use,” he said.

In 2015-16, the share of coal in commercial energy supply was 55 per cent but is likely to dip to 48-54 per cent by 2040 as thermal and renewable energy’s contribution is likely to go up.

Nevertheless, Singh says coal demand is going to remain high.

Year-on-year, there was growth of 17 per cent in coal-based thermal power generation in August, while hydro power generation fell 12 per cent and nuclear power generation fell 36 per cent. Generation from other sources declined by seven per cent in the month.

Singh pointed to six areas the company needs to focus. One is the setting up of three railway links, to ease supply from Central Coalfields, Mahanaadi Coalfields and South-Eastern Coalfields. A second is acquisition of land for expansion of operations. Coal evacuation and availability of railway rakes has been a long pending concern with Coal India, the railways and consumers.

Recently, daily loading by Coal India rose to 250 rail rakes, of which 225 rakes went for power plants.

The company is also focusing on online and technological improvement. After putting in place an online monitoring system in 69 projects, Coal India will be implementing the technology in 67 more mines and is also putting in place an Enterprise Resource Planning system. Exploration capacity will be augmented with more use of hydrostatic drills, geophysical loggers and other technology.

A company official, in response to shareholders’ enquiry, stated that the total benefit for consumers under the new goods and services tax regime would be Rs 6,000 crore annually, with the tax on coal down to five per cent.