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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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Thursday, 11 November 21
ASIA COAL POWER PIPELINE TO SHRINK BY TWO THIRDS AFTER CHINA FINANCE CUT - REUTERS
Asia’s pipeline of proposed coal-fired power plants is expected to shrink from 65 gigawatts to 22 gigawatts following China’s pledge to ...
Tuesday, 09 November 21
ASIA-PACIFIC IS HOME TO SOME OF THE WORLD'S LARGEST CARBON-EMITTERS - 2 CHARTS SHOW ITS RELIANCE ON COAL - CNBC
Asia-Pacific is home to some of the world’s largest carbon emitters — and experts say much of global efforts to fight climate change de ...
Tuesday, 09 November 21
CHINA DAILY COAL OUTPUT HITS MULTI-YEAR PEAK, PRICES EXPECTED TO FALL - REUTERS
China’s daily coal output hit 11.93 million tonnes last week, a multi-year high as more capacity returned to operation, the state planner sai ...
Thursday, 04 November 21
CHINA'S COAL MARKET SEES SIGNIFICANT IMPROVEMENTS: NDRC - GLOBAL TIMES
China’s top economic planner has declared initial success in its efforts to ensure coal supply and stabilize prices, saying that daily coal o ...
Thursday, 04 November 21
CHINA THERMAL COAL PRICES RISE AFTER FALLING FOR 10 DAYS - REUTERS
China thermal coal futures rebounded on Wednesday after falling for 10 days on an expected jump in fuel demand to meet heating needs amid forecasts ...
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- Toyota Tsusho Corporation, Japan
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- Bank of Tokyo Mitsubishi UFJ Ltd
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- Energy Development Corp, Philippines
- Sindya Power Generating Company Private Ltd
- Georgia Ports Authority, United States
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- Thai Mozambique Logistica
- Semirara Mining and Power Corporation, Philippines
- Coastal Gujarat Power Limited - India
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- Aditya Birla Group - India
- Gujarat Mineral Development Corp Ltd - India
- Minerals Council of Australia
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- Merrill Lynch Commodities Europe
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- Parliament of New Zealand
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- Australian Commodity Traders Exchange
- Renaissance Capital - South Africa
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- Bhatia International Limited - India
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- Tata Chemicals Ltd - India
- Sojitz Corporation - Japan
- CNBM International Corporation - China
- Directorate Of Revenue Intelligence - India
- Romanian Commodities Exchange
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- LBH Netherlands Bv - Netherlands
- Karbindo Abesyapradhi - Indoneisa
- Australian Coal Association
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- Mintek Dendrill Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Anglo American - United Kingdom
- Posco Energy - South Korea
- Commonwealth Bank - Australia
- PTC India Limited - India
- Trasteel International SA, Italy
- Carbofer General Trading SA - India
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- Makarim & Taira - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- Chamber of Mines of South Africa
- Indian Energy Exchange, India
- Borneo Indobara - Indonesia
- Global Coal Blending Company Limited - Australia
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- Electricity Generating Authority of Thailand
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- Bulk Trading Sa - Switzerland
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- Wood Mackenzie - Singapore
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- Coal and Oil Company - UAE
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- Standard Chartered Bank - UAE
- Star Paper Mills Limited - India
- Gujarat Sidhee Cement - India
- GMR Energy Limited - India
- Manunggal Multi Energi - Indonesia
- Riau Bara Harum - Indonesia
- Maheswari Brothers Coal Limited - India
- Mercator Lines Limited - India
- Indonesian Coal Mining Association
- MS Steel International - UAE
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- Bayan Resources Tbk. - Indonesia
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- PowerSource Philippines DevCo
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- Mjunction Services Limited - India
- Global Business Power Corporation, Philippines
- Central Electricity Authority - India
- Ministry of Transport, Egypt
- Meralco Power Generation, Philippines
- Billiton Holdings Pty Ltd - Australia
- Sinarmas Energy and Mining - Indonesia
- Cement Manufacturers Association - India
- Meenaskhi Energy Private Limited - India
- Eastern Coal Council - USA
- Jaiprakash Power Ventures ltd
- IEA Clean Coal Centre - UK
- Binh Thuan Hamico - Vietnam
- The Treasury - Australian Government
- GAC Shipping (India) Pvt Ltd
- Neyveli Lignite Corporation Ltd, - India
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- Bharathi Cement Corporation - India
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- Directorate General of MIneral and Coal - Indonesia
- Bukit Makmur.PT - Indonesia
- Planning Commission, India
- New Zealand Coal & Carbon
- Edison Trading Spa - Italy
- Vijayanagar Sugar Pvt Ltd - India
- Rio Tinto Coal - Australia
- Kideco Jaya Agung - Indonesia
- White Energy Company Limited
- Essar Steel Hazira Ltd - India
- Agrawal Coal Company - India
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- PetroVietnam Power Coal Import and Supply Company
- Power Finance Corporation Ltd., India
- Alfred C Toepfer International GmbH - Germany
- Vizag Seaport Private Limited - India
- Price Waterhouse Coopers - Russia
- SN Aboitiz Power Inc, Philippines
- Ministry of Mines - Canada
- Bukit Asam (Persero) Tbk - Indonesia
- Banpu Public Company Limited - Thailand
- Miang Besar Coal Terminal - Indonesia
- VISA Power Limited - India
- Xindia Steels Limited - India
- IHS Mccloskey Coal Group - USA
- TeaM Sual Corporation - Philippines
- Indian Oil Corporation Limited
- Oldendorff Carriers - Singapore
- Kalimantan Lumbung Energi - Indonesia
- Electricity Authority, New Zealand
- Wilmar Investment Holdings
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- Intertek Mineral Services - Indonesia
- Attock Cement Pakistan Limited
- Baramulti Group, Indonesia
- Africa Commodities Group - South Africa
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- Port Waratah Coal Services - Australia
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