Wednesday’s nationwide strike was meant to protest against broad economic issues that have little relevance to coal. But Coal India — the state-owned commercial miner — may end up losing an estimated 2.5 million tonnes of production and 2 million tonnes of sales.

According to the company, as its mines are running at full capacity and the Railways is facing serious constraints in stepping up wagon supplies beyond present levels; there is no way the shortfall can be mitigated for the rest of the fiscal year.

A rough estimate suggests the country is thus being deprived of 400 MW of electricity generation, equivalent to the daily consumption of Patna. Coal India should sacrifice Rs 240 crore of revenue opportunities. The Railways will lose an identical amount of freight earnings.

The Centre and coal-bearing States lost an estimated Rs 60 crore (Rs 300 a tonne) of taxes and duties collected at the pithead. The actual loss to the exchequer is much higher, as more taxes are collected from downstream activities.

Prolonged impact

“Nothing could be worse than a strike, at this juncture,” says a worried CIL Chairman S. Narsing Rao. And at CIL, the strike actually began early. On February 19, the company’s daily supplies were down by 0.2 mt as trade unions led contractual workers to observe a day’s strike.

Narsing Rao expects sales will be hit by another 1.6-1.8 mt during the two-day industry strike called by 11 central unions on February 20 and 21. But that’s not all. CIL’s sales have already been hit by lower availability of rakes (goods trains) than required.

Problem compounded

CIL needs 238 rakes a day to meet the quarterly (January-March 2013) supply target of 135 mt. Till early this week, the Railways could deploy only 215 rakes a day, meaning that part of the production (approximately 1.6 mt a day) is added to inventory.

The problem is now being worsened by the strike as rake availability will be further impacted throughout this week. “We expect rake availability to remain lower (than 215 a day) for at least two more days from Feb 21,” a company official said

Net result is, though CIL is expected to resume production at full swing from February 22, a good quantity of coal will pile up as inventory — that too, at a time when power facilities are stranded for want of fuel.

(This article was published on February 20, 2013)
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