The Hindu Business Line : CIL may slow down production — Current stock at pitheads crosses 19 mt

COAL India Ltd (CIL) is likely to slow down production over the next few weeks. The two subsidiaries that are likely to be affected most are Mahanadi Coalfields Ltd (MCL) and South Eastern Coalfields Ltd (SECL).

This is because a number of thermal power plants are unable to lift the amount of coal dedicated to them through the existing linkage system.

The sudden slackness in demand from thermal power plants is because power generated by the hydel power plants has gone up following heavy rains that have increased the speed of water flow in several rivers resulting in higher generation of electricity.

According to CIL sources, the current stock at pitheads is at a record high of 19.2 million tonnes (mt). Normally, CIL has a pithead stock of around 12 mt.

"The only way out is to direct this coal, earmarked for the core sector, to non-core consumers. But again there are limitations in transporting them. As a result, even if we produce, there are problems of space for maintaining the huge inventories," sources said.

Interestingly, according to company officials, this situation can actually result in improved financial result for the company.

"The price realised from the non-core sector unlinked customers is often substantially higher compared to core sector linked customers. So if we are able to give this coal to the non-core consumers, we will get better prices," officials said.

But this does not mean that the public sector behemoth would produce lower than the target set for it in the annual memorandum of understanding (MoU) with the Government.

"For the past several years we have always exceeded the target given to us by several million tonnes. This year's target is 343 mt and we will, even under this situation, in all probability produce more than the targeted amount," officials said.

The Ministry of Coal has already taken up the matter with the Ministry of Power. "But directing core sector coal to non-core consumers requires a policy decision. Also, the availability of railway wagons is a bigger problem for the non-core sector buyers as they are more dependent on road transport. We are trying to co-ordinate with the railways for higher utilisation of rake capacities and things are likely to be finalised soon," officials said.