West Bengal government undertaking Durgapur Projects Limited (DPL) may be forced to shut down its two coke oven batteries due to erratic coal supply and poor offtake.
DPL is struggling with an erratic coking coal supply due to its default on payments to Bharat Coking Coal Limited. Bharat Coking has now threatened to cut off supply altogether unless DPL first clears its old dues, putting the cash-strapped DPL in a tight spot.
The troubled company has now sought the state governments help. Unless coal supplies are maintained at the current minimum level, the ovens will have to be shut down, with disastrous consequences. Coke oven batteries cannot be shut down periodically. Months are needed to re-start a battery which has been shut. This obviously entails heavy expenditure.
Also Read
Meanwhile, daily oven pushing has been reduced to a minimum of 30 against the optimum pushing level of 75 to 80 a day in these two ovens. DPL is now operating only units I and V of its five-unit coke oven plant. DPL had been counting on an order from the Bokaro steel plant to convert coking coal into coke. However, the conversion order was suspended in December 1996 as the Bokaro plants own coke requirement declined following a slump in steel demand.
The overall recession in the steel industry meant that conversion orders from other sources also dried up for DPL. This development in the steel industry caught DPL off-guard. Its search for an alternative market has not borne fruit so far.
DPL had signed the conversion order agreement with the Bokaro steel plant in early 1995. The order helped DPL to reduce its losses from Rs 46.91 crore in 1994-95 to Rs 4.15 crore in 1995-96, while the coke oven output increased by 15 per cent between April and December 1996.
However, Bokaro Steel Plant suspended the agreement after about two years, although it was valid for three years. DPL has now requested the steel ministry to honour the agreement and resume the conversion job. However, early resumption of the contract is ruled out because of the slump in the steel industry.
DPL is thus trapped in a vicious cycle. Given the nature of a coke oven battery, DPL cannot suspend production till the market looks up. At present, it is able to sell only the gas, while almost the entire by-product remains unsold. The increasing inventory is now blocking up DPLs working capital, leaving it with inadequate funds to buy coking coal. But the batteries face closure without coal supply.