New Delhi | April 24, 2016: The Coal Ministry is not likely to auction mines in the first quarter of the current fiscal and the strategy for the remaining quarters will depend on demand.
The Ministry’s decision is largely due to the outcome of the fourth round of auctions which had to be cancelled in December last, due to low bidding interests. There were almost no takers for the fuel in the fourth round as there was more supply than the demand, besides a fall in global prices.
Nine mines with 1.167 billion tonnes of reserves were on offer in the fourth round.
Coal Secretary Anil Swarup told BusinessLine: “Today the situation has reversed — it is now a demand side problem rather than a supply side one.”Increased domestic availability has also helped cut the country’s import bill by ₹28,000 crore through a 15 per cent reduction in volumes. Coal India’s additional output in the last two financial years is about 73.98 million tonnes.
Last fiscal, Coal India produced 42.28 million tonnes more, hitting an output of 536.51 million tonnes. In addition, Singareni Collieries Company Ltd’s production of 61 million tonnes in 2015-16 fiscal meant that public sector coal production was nearly 600 million tonnes.
“It is the same people who are now helping in producing more. The output has gone up because of faster land acquisition, forest clearances, and increased rake availability from the Indian Railways,” said Swarup.
Following the Supreme Court’s September 2014 directive to de-allocate 204 coal mines, the government has been conducting fresh auctions and allocation to public sector — both central and state — entities for these areas.
Out of 55 mines that were auctioned and allocated last year in three rounds, so far 10 mines are operational and have produced anywhere between 10 and 11 million tonnes. In all, 28 mines were auctioned to the private sector and 27 mines allocated to central and state PSUs. There are still 149 mines that can be auctioned to the private sector or allocated to state and central public sector units.
Thermal coal imports
Piyush Goyal, Minister of State (Independent Charge) for Power, Coal and New & Renewable Energy, is confident that India can soon completely stop thermal coal imports.
However, with some coastal power plants requiring coal of a higher gross calorific value (GCV) than what is currently available locally, the country would still keep importing some amounts. GCV is the amount of heat produced from burning a specified quantity of fuel. Typically, GCV is measured in kilo calorie per kilogram.
“Our objective is to see that such coal (in context of quality) as is available in India is not imported,” said Swarup adding that in the foreseeable future, apart from some coastal plants, thermal coal imports will not be required.
Coal price
India’s falling imports have left their mark on benchmark coal prices in the region which have touched multi-year lows in recent weeks. But, despite the weak prices of imported coal, Swarup remains confident that domestically produced fuel will remain more competitive.
“Even now, coal prices in the region are 30-40 per cent higher than domestic coal. This is when prices are at multi-year lows. I cannot comment whether global prices will drop further but at these levels, domestic coal is much cheaper,” he said.
(Source: http://www.thehindubusinessline.com/)