Economy

Thermal coal imports will stop by 2017: Goyal

Our Bureau Kolkata | Updated on January 23, 2018 Published on May 15, 2015

Union Coal Minister Piyush Goyal, West Bengal Chief Minister MamataBanerjee, and Minister of State for Urban Development, Housing andUrban Poverty Alleviation Babul Supriyo at the inauguration of CoalIndia’s new corporate office at Rajarhat on Friday. ASHOKE CHAKRABARTY

Minister bets on improved availability of domestic fuel

Import of thermal or steam coal used in electricity generation will start declining from this fiscal due to enhanced availability of domestic coal, Union Coal Minister Piyush Goyal said. The decline will be so sharp that imports “will stop” in end 2017, Goyal said.

“We will see the declining trend in the current year itself and in about two to two-and-a-half years’ time thermal coal import will stop while the higher calorific coal (coking coal) needed for steel plants may still continue to get imported,” Goyal told newspersons at a reception organised by Coal India at a city hotel.

The Minister was here to inaugurate CIL’s new office complex at the New Town satellite-township on the eastern fringes of Kolkata.

The Minister’s statement comes on the back of a rising trend in thermal coal imports.

While CIL extracted 32 million tonnes more coal last year recording close to seven per cent growth over the previous year, coal imports also zoomed.

According to India Coal Market Watch (ICMW) — a wing of Kolkata-headquartered mineral auctioneer metaljunction — thermal coal imports increased by nearly 38 per cent from 136.72 million tonnes (mt) in 2013-14 to 188.4 mt in 2014-15. This is nearly 40 per cent of Indonesia’s annual production. The trend continues in this fiscal.

In April, CIL produced nearly 11 per cent more coal compared to the same period last year. According to ICMW, during the period imports grew 7.3 per cent from 14.07 mt to 15.10 mt owing to soft global coal prices as well as weak sea freight.

India is currently the world’s second largest importer of thermal coal, after China. Any drop in the country’s demand would impact the world coal market, especially the prices of Indonesian coal.

Indonesia contributes to a lion’s share of the Indian import basket. The 4200 gcv (heat value) Indonesian thermal coal is available at Indian ports at approximately $38 a tonne, 15-20 per cent cheaper than last year.

The Minister’s assumptions are based on expectations of CIL enhancing production at over 15 per cent compounded annual rate for the next five years from 500 mt to one billion tonne (1,000 mt) with an investment of $20 billion.

The total availability (including captive and State government run miners), he says will treble to 1.5 bt at nearly 22 per cent CAGR — double the peak rate of coal production experienced in China between 2000 and 2010.

CIL increased production by 32 mt in the last fiscal. But nearly one-fifth of it (6 mt) was lying in the pit head due to paucity of evacuation facilities, which Goyal described as “strategic reasons”.

The Minister expects the evacuation facilities will be in place in three years. He is betting big on the completion of three railway lines in Jharkhand, Chhatishgarh and Odisha that would help evacuate nearly 300 mt of coal.

Holes in argument

Debasish Mishra, senior director of Delloite India, is clearly apprehensive of the claims on both domestic production and imports.

“The one billion tonne target on CIL is a very ambitious one,” he says adding that it would depend on “issues related to transportation and land acquisition”. Mishra is more categorical on imports.

Considering that India is adding 15-20 giga watt new electricity generation capacities over and above a backlog of 30 GW stranded capacities (either for lack of fuel or land of sales agreement with buyers); it will be a “big achievement” for the government to restrict imports at 200 mt in the coming years, he said.

Published on May 15, 2015
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