KOLKATA | May 02, 2016: Coal India has decided to go slow on production till its full-to-brim stocks ease and it has enough space to store additional coal extracted from mines. In the meantime, till demand picks up, the company has decided to expose coal seams and standby for increasing production when necessary.
With several days of coal stacked at power plants, stocks have started to pile at mines, a situation that CIL wants to avoid.
A CIL official said: "We would not like to be saddled with a product that is self-combustible when left exposed in large heaps for long, especially in summer. High coal inventory also leads to quality deterioration and adds to environmental concerns."
"All subsidiaries are geared to increase coal production but accumulating stocks at pitheads has been a major constraining factor. It is not permitting us to produce additional volumes because any extra ton produced will add to the already filled up storage facilities," the company said in the statement.
A senior CIL official said: "Ramping up coal production would not be a problem because over burden removal was an all-time high during 2015-16. Last year CIL removed an additional 265.63 million cubic meters of top soil compared to the previous fiscal."
Over burden removal is simply a technical terms used for removing the top soil that covers a seam of coal.
With enough top soil removed and coal ready for mining off the shelf, CIL would be able to pick up production tempo once coal demand picks up. Soaring mercury in April 2016 did not deter the company and it managed to remove 11.12 million cubic meters of top soil registering an 11.1 per cent growth.
Production logjam is expected to break once ground stock reduces and demand perks up. At present power companies are sitting on a stock of 36 million tonnes of coal ending April 2016 against 29 million tonnes last year.
The current coal stock position at power utilities is the highest ever in the last four years. It is a greatly improved situation since 2012 when stocks were a little over 14 million tonnes with 35 stations reeling under critical stock position and 25 under super critical condition.
With power utilities sitting on stock piles they are tapping coal from their own stocks instead of placing fresh orders.
Power accounts for 78 per cent of CIL's overall coal off-take. Currently, power companies are placing very small orders and the coal major's challenge is to liquidate stocks. Nevertheless, it is pushing coal through e-auction and proactive marketing measures.
CIL offered 3.54 million tonnes of coal during April 2016 through special forward e-auction for captive power plants. It began the 2016-17 fiscal with around 57.67 million tonnes of coal stocks, managed to reduce it to 55.31 million tonnes ending April 2016 - a reduction of 2.36 million tonnes.
CIL is pursuing marketing with quality assurance along with quantity as mandatory. In an effort of ease business with customers it has introduced a friendly business process interface.
Nevertheless, CIL managed to sell 42.46 million tonnes of coal in April this year which was 1.06 million tonnes less compared to 43.52 million tonnes sold during April 2015. Lower demand for the fuel led to reduced sale, the company said in a statement.
Coal sale to power companies reduced by 2.28 million tonnes to 30.99 million tonnes in April this year against 33.27 million tonnes on a year-on- year comparison.
During April 2016 coal off-take was 42.46 million tonnes, which is, 2.37 million tonnes more than the production of 40.09 million tonnes recorded during the month.
(Source: http://economictimes.indiatimes.com/)