New Delhi, April 29

For India, the world’s second largest coal consumer, achieving the coal production target of 1 billion tonnes (BT) is not an issue, but what ails the sector is the logistics network for transporting the commodity, a mainstay of the country’s power sector

S&P Global Insights Head of Global Coal Pricing, Deepak Kannan told businessline that India’s FY24 target of 1 BT of coal production is “achievable”.

“However, the main issue is evacuation. Producing coal is one thing, but transporting it is another. So, logistics has to be developed to ensure smooth movement. As a buyer if I have to look at costs, I will choose the cheapest alternative. Coal is not going away any time soon, so it’s better to have good logistics,” he suggested.

Emphasising that logistics is important to provide cost-effective coal, he said that it is crucial for power generation in a bid to cater to the growing demand considering India is a big economy and is still fast growing.

“Moving coal within the country is difficult, but importing from outside is easier. Here, I’m not saying that India’s imports will grow, but we are always falling short by 150-160 MT of the total demand. So that is being fulfilled by imports,” he added.

Inland waterways

Kannan stressed that inland waterways can be very helpful in evacuating coal from east India, particularly Odisha. India’s major coal reserves in the east are concentrated in Odisha, Chhattisgarh and Jharkhand.

“Inland waterways are a great way of transporting. It can be a good cost effective measure. If we can really focus on developing that it could be very helpful for buyers in the hinterlands and closer to river ports. It will become easier for buyers to decide whether to buy domestic or international coal,” he noted.

The government is also working at developing inland waterways. India at present lags in utilising its waterways for material movement. The Inland Waterways Authority of India (IWAI) is developing two National Waterways (NWs)—NW-5 and NW-64, which can help in faster evacuation of coal.

The Talcher-Dhamra stretch of river Brahmani, Geonkhali-Charbatia stretch of east coast canal, Charbatia- Dhamra stretch of Matai river and Mangalgadi-Paradip stretch of Mahanadi delta rivers (623 km) has been designated as NW-5.

Coal from Talcher to Dhamra and Paradip ports is the most important potential cargo for this waterway. It is estimated that around 11 MT of cargo can be transported per year, which can go up to 23 MT in the next 15 years.

Besides, the 425 km-long Mahanadi river section from Sambalpur to Paradip sea mouth constitutes the NW-64. The total traffic potential from Sambalpur and Jharsuguda clusters combined is estimated at 24.10 million tonnes per annum (MTPA) by 2025.

NW-64 meets NW-5 near Paradip and has some of the important industrial clusters in the industrial belts of Sambalpur, Jharsuguda and Cuttack in Odisha. Besides, developing the Birupa/ Brahmani stretch will help route traffic from Mahanadi to the Dhamra port via NW-5.

Analysts said that developing these two inland waterways will offer another mode for evacuating coal, thereby decongesting the existing rail and road network for cargoes originating or destined for Paradip port.

Coal logistics plan

Besides, to ramp up the coal logistics sector, the Coal Ministry will finalise its logistics policy as well as the national coal logistics plan in the current financial year.

This includes 71 first mile connectivity (FMC) projects, and a total of 35 critical rail projects, including for faster evacuation of coal from major coal bearing states of Odisha and Chhattisgarh.