Economy

CIL facing 450 mt supply shortfall against LoA

PTI Kolkata | Updated on April 27, 2011

Mining activities of Coal India

Coal India Ltd (CIL) is facing a supply shortfall of 450 million tonne (mt) of coal for consumers with whom it has already signed supply agreements.

“At present, we are facing a supply shortfall of 450 million tonnes as per Letters of Assurance (LoA) issued so far and our production plan for the next 10 years,” CIL chairman, Mr N C Jha said on the sidelines of an interactive session with the Indian Chamber of Commerce.

He added, however, “The LoA for supply is linked to certain milestones to be achieved by the respective companies”.

“Even, if only 50 per cent of the LoA achieve a milestone, then we will face a supply constraint of 200—250 million tonnes. So we have to gear up to import coal to fulfil the production—supply mismatch,” Mr Jha said.

The mismatch has widened as CIL failed to expand existing mines and take up new projects due to restrictions imposed by the Ministry of Environment and Forests.

Mr Jha added that long term supply contracts with global suppliers seem to be the only viable option right now.

“The board approved the tender document for a long term supply contract and we will send this document to all firms which have expressed interest. We received 27 initial proposals,” he said.

CIL also had a JV with Shipping Corporation and was keen to rope in logistics companies and the Indian Railways to transport goods to customers’ doorstep.

The coal major has set an internal sales target of 477 million tonnes of coal for the current fiscal, which can be accomplished if CIL gets 190 rakes a day, as against 180 rakes at present.

The announced production target is 452 million tonnes, as against 431 million tonnes achieved in 2010—11.

Published on April 27, 2011

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