Coal India ups production; stocks in power plants to ease by January

Availability of coal stocks with the country's thermal power plants is expected to normalise to a large extent by mid-January as state-owned Coal India Ltd (CIL) has been able to step up production and debottleneck its supply network to a large extent after freeing up the railway rakes.

Senior company officials told Business Standard that while previously the company's average daily production stood at 1.4 million tonnes (mt) a day, they were able to scale it up to 1.8 mt a day and in the next few days, daily production would touch 2 mt a day.

"However, the target is to despatch over 2 mt coal a day so that we are able to sell over 600 mt of coal annually", a senior CIL official told this newspaper.

As per the official, CIL's average rake loading has been hovering around 247-250 rakes a day which ensured that CIL is able to despatch bulk quantity of coal to power plants which are outside the pithead area.

The coal stock situation in the country's thermal generators has started showing signs of improvement. On December 17, on an average, the power plants had coal reserves of nine days as compared to the six-day stock on the similar date of November 2017. Thus, on an average, every power plant has a coal stockpile of around 13.5 mt.

Also, the number of super-critical or critical plants has reduced to nine as compared to the previous figure of 15 plants.

"There are visible improvements in the coal stock situation in the power plants and the situation will ease to a large extent during January. However, to avoid any such future situation, power companies need to stock coal as per the guidelines", the official told this newspaper.

The Central Electricity Authority guidelines state that power plants need to maintain 22 days of coal stock.

 

On the other hand, CIL executives opined that with the winter approaching, the demand for power, in tune with seasonal phenomenon every year, will slow down which will help power companies to further improve their coal stocks.

On the other hand, CIL also modified its existing despatch method to supply coal. As the coal crisis with the power plants initially deepened, CIL modified the despatch method by allowing its existing power sector consumers to lift coal as much as they could by using railway rakes as well as the road network. However, this month, the same has been extended to consumers who do not have a fuel supply agreement and mainly purchase coal from e-auctions.

"This way, we can assure supplies not only to the power sector but also to steel and cement companies as well. We have sufficient coal in our mines", a second official from CIL told this business daily.

This move helped CIL free up the railway rakes and use them dedicatedly for supplies to power plants which are far away from coal mines.

Last year, when CIL faced an oversupply situation after demand for coal dropped, the company had carried on stripping or overburden (OB) removal activities by exposing the coal seams, particularly in Mahanadi Coalfields Ltd (MCL), which is its largest and most crucial subsidiary.

Although it initially resulted in higher operational costs, the OB removal turned out to be the saviour in times of coal crisis as CIL was able to outpace its daily average production record of 1.4 mt.

In 2015-16, CIL's OB removal surged by 262.38 million cubic metre or 29.5 per cent as compared to 2014-15. As on March 31, 2017, the company had been able to expose 1156.38 million cubic metre of coal seams which were ready for mining at any given point of time. Because of this reason, CIL was able to go slow on OB removal in 2016-17 as it increased by a mere 0.65 per cent.

Nevertheless, senior CIL executives opined that the company still faces infrastructural problems, particular unavailability of railway lines in key production areas in MCL which is affecting offtake. The company has approached the Centre to construct railway tracts which in future will address the problem of evacuation.