CIL’s measures may help reduce coal imports in FY21

Our Bureau Kolkata | Updated on April 01, 2021

Coal major pumped in additional quantities into system prompting customers to opt for domestic coal

A series of measures undertaken by Coal India Ltd (CIL) is set to yield result as the country’s coal import is likely to be lower by 90 million tonne (mt) in FY21.

While production dropped by nearly one per cent at 596.2 mt in 2020-21, against 602.1 mt during the previous fiscal, CIL was able to pump additional quantities of coal into system thereby prompting customers to opt for close to 90 mt of domestic coal in lieu of coal imported from abroad, said a press statement issued by the company.

The offtake was also down by a little over one per cent at 573.8 mt, compared to 581.4 mt in FY20.

“Despite our best efforts there was marginal contraction in output and off-take by one per cent and 1.3 per cent respectively on a year-on-year comparison due to Covid-led lack of demand,” a senior company official said in the release.

Measures initiated

CIL opened a new window exclusively for coal importers in October 20 where it allowed its subsidiaries to sign MoUs with 17 power plants linked to them to substitute their imports with its own coal, for blending.

Additional coal was allocated to Central and State generating companies, under flexi-utilisation, enabling them to avert coal imports. ACQ (annual contracted quantity) for power plants was enhanced to 100 per cent of normative requirement from 90 per cent. Increased quantity of coal was offered to non-regulated sectors against FSAs up to 100 per cent of ACQ. This apart, trigger level for power sector was elevated from 75 per cent to 80 per cent.

“Increased bookings in auctions was a major booster in import substitution efforts. While these actions cumulatively helped power sector opt for domestic coal to the tune of 42 mt, NRS (non regulated sector) picked up bulk of the rest,” the release said.

The company booked 124 mt of coal under five e-auction windows in FY21, which is 88 per cent higher than 66 mt booked in 2019-20.

Over Burden Removal (OBR) registered a growth of 17 per cent thereby easing the way for faster future production.

“In the absence of our import substitution measures through a host of concessions and benefits the customers would have had no alternative than to source coal from imports. In that, it was a productive and timely move,” the release said.

Low offtake

CIL’s supplies were hit by reduced coal lifting by the power sector and a steep 31 per cent fall in road transport. Coordinated efforts with Railways witnessed loading from CIL’s own sources go up by 11 per cent on a year-on-year basis.

“The shrinkage in supplies could have been more had not for the spate of actions and sops offered to our customers,” the official said.

The lack of demand also led to a stockpile of 99 mt at CIL pitheads. Further production would have resulted in stocks building up even higher. With the expected revival in demand during summer months of Q1FY22, the company would have sufficient buffer to meet any surge and the stocks would be reduced substantially.

Published on April 01, 2021

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