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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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Tuesday, 26 October 21
CHINA'S COAL-RICH SHANXI BEEFS UP COAL PRODUCTION - XINHUA
Major coal producers in north China’s Shanxi Province, a leading coal-producing region of the country, have beefed up production to ensure en ...
Tuesday, 26 October 21
ENERGY CRISIS SHOWS COAL IS AN EXPENSIVE AND UNRELIABLE SOURCE OF ELECTRICITY GENERATION - IEEFA
Any knee-jerk reaction that urges more investment in coal completely misses the point
India is teetering on the brink of joining a growing glo ...
Tuesday, 26 October 21
CHINA TO INVESTIGATE ENERGY INDEX PROVIDERS IN BID TO TAME COAL PRICES - REUTERS
China said on Monday it will investigate energy price index providers as it urged coal industry participants to “strictly” meet contrac ...
Tuesday, 26 October 21
THERE IS PLENTY OF COAL AND GAS IN THE WORLD BUT A VOLATILE MARKET IS NOBODY'S FRIEND - IEEFA
Gas will be winding its way out of the energy system
Gas prices are continuing to surge around the world. The cost of gas is at unpr ...
Tuesday, 26 October 21
AUSTRALIA EXPORTED 51.6 MLN TONNES OF COAL TO INDIA IN FIRST 10 MONTHS, 19% OF ALL AUSTRALIAN COAL EXPORTS; CHINA WAS THE DESTINATION FOR JUST 0.7% - BANCHERO COSTA
2020 proved to be a truly terrible year for global seaborne coal trade. In 2021 things started pretty badly, but we are seeing increasing signs of ...
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- Ministry of Finance - Indonesia
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- Petron Corporation, Philippines
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- Economic Council, Georgia
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- MS Steel International - UAE
- Meralco Power Generation, Philippines
- The Treasury - Australian Government
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- Bharathi Cement Corporation - India
- Aboitiz Power Corporation - Philippines
- Australian Coal Association
- Orica Australia Pty. Ltd.
- Borneo Indobara - Indonesia
- The State Trading Corporation of India Ltd
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- Sree Jayajothi Cements Limited - India
- Indian Energy Exchange, India
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- Sical Logistics Limited - India
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- Australian Commodity Traders Exchange
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- PTC India Limited - India
- Attock Cement Pakistan Limited
- Georgia Ports Authority, United States
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- Sindya Power Generating Company Private Ltd
- Leighton Contractors Pty Ltd - Australia
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- PetroVietnam Power Coal Import and Supply Company
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- LBH Netherlands Bv - Netherlands
- Metalloyd Limited - United Kingdom
- Kumho Petrochemical, South Korea
- AsiaOL BioFuels Corp., Philippines
- Malabar Cements Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Sakthi Sugars Limited - India
- Mjunction Services Limited - India
- San Jose City I Power Corp, Philippines
- GMR Energy Limited - India
- Singapore Mercantile Exchange
- ICICI Bank Limited - India
- European Bulk Services B.V. - Netherlands
- Central Electricity Authority - India
- The University of Queensland
- SN Aboitiz Power Inc, Philippines
- Rashtriya Ispat Nigam Limited - India
- Meenaskhi Energy Private Limited - India
- Electricity Authority, New Zealand
- Maheswari Brothers Coal Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Ministry of Mines - Canada
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- Wilmar Investment Holdings
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- Energy Link Ltd, New Zealand
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- Offshore Bulk Terminal Pte Ltd, Singapore
- Bukit Baiduri Energy - Indonesia
- Sojitz Corporation - Japan
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- McConnell Dowell - Australia
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- Heidelberg Cement - Germany
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- Indian Oil Corporation Limited
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- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Chettinad Cement Corporation Ltd - India
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- Parry Sugars Refinery, India
- Central Java Power - Indonesia
- Sarangani Energy Corporation, Philippines
- Xindia Steels Limited - India
- Latin American Coal - Colombia
- Alfred C Toepfer International GmbH - Germany
- Dalmia Cement Bharat India
- Bahari Cakrawala Sebuku - Indonesia
- Global Business Power Corporation, Philippines
- Simpson Spence & Young - Indonesia
- Grasim Industreis Ltd - India
- Siam City Cement - Thailand
- Coalindo Energy - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- New Zealand Coal & Carbon
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- SMC Global Power, Philippines
- Global Coal Blending Company Limited - Australia
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- Trasteel International SA, Italy
- Commonwealth Bank - Australia
- Siam City Cement PLC, Thailand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indo Tambangraya Megah - Indonesia
- Electricity Generating Authority of Thailand
- Planning Commission, India
- Iligan Light & Power Inc, Philippines
- Baramulti Group, Indonesia
- International Coal Ventures Pvt Ltd - India
- London Commodity Brokers - England
- Kobexindo Tractors - Indoneisa
- Indika Energy - Indonesia
- VISA Power Limited - India
- Bhatia International Limited - India
- OPG Power Generation Pvt Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Makarim & Taira - Indonesia
- Africa Commodities Group - South Africa
- South Luzon Thermal Energy Corporation
- Kalimantan Lumbung Energi - Indonesia
- Globalindo Alam Lestari - Indonesia
- Merrill Lynch Commodities Europe
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- Eastern Coal Council - USA
- Indonesian Coal Mining Association
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- GAC Shipping (India) Pvt Ltd
- Straits Asia Resources Limited - Singapore
- Miang Besar Coal Terminal - Indonesia
- Altura Mining Limited, Indonesia
- Timah Investasi Mineral - Indoneisa
- TeaM Sual Corporation - Philippines
- Larsen & Toubro Limited - India
- Essar Steel Hazira Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Billiton Holdings Pty Ltd - Australia
- TNB Fuel Sdn Bhd - Malaysia
- Standard Chartered Bank - UAE
- Deloitte Consulting - India
- Vizag Seaport Private Limited - India
- Star Paper Mills Limited - India
- Kepco SPC Power Corporation, Philippines
- Jorong Barutama Greston.PT - Indonesia
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- CIMB Investment Bank - Malaysia
- Coal and Oil Company - UAE
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- Bulk Trading Sa - Switzerland
- Videocon Industries ltd - India
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- Kohat Cement Company Ltd. - Pakistan
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- Jaiprakash Power Ventures ltd
- Pipit Mutiara Jaya. PT, Indonesia
- Anglo American - United Kingdom
- Romanian Commodities Exchange
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