KOLKATA | May 16, 2016: State-run Coal India's decision to cut production has helped reduce excess coal stockpile at pitheads and power plants by about 5 million tonnes since the beginning of this fiscal, a company executive said. Inventory of unused coal at about 100 power plants has come down to 34 million tonnes since April 1, the executive said, requesting anonymity.

Last year, the Kolkata-headquartered miner had recorded double-digit jump in coal production. However, it saw slow offtake of its coal due to the slowdown in industry and increasing emphasis on clean energy.

Coal stocks at pitheads had increased, leaving little space for storing additional production. On the other hand, faced with less-than-anticipated growth in demand, thermal power plants had to request Coal India to go slow on supplies to prevent further buildup of inventory. "We would not like to be saddled with a product that is selfcombustible when left exposed in large heaps for long, especially in summer. High coal inventory also leads to quality deterioration and adds to environmental concerns, the Coal India executive told ET.

However, with electricity demand now on the rise due to the summer heat, power stations are using up their excess coal stocks, creating space for fresh supplies. According to data available on the Central Electricity Authority's website, the average coal stock at power plants has reduced to 23 days, or 34 million tonnes, from about 26 days at the beginning of the fiscal, after Coal India decided to go slow on production.

Meanwhile, Coal India has decided to expose coal seams till demand picks up more. "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 tonne produced will add to the already filled up storage facilities," the executive said.

The current coal stock position at power utilities is the highest ever in the last four years. The situation is a big improvement since 2012 when stocks were a little over 14 million tonnes, with 35 stations reeling under 'critical' stock position and 25 facing 'super-critical' condition. Power producers buy about 78% of Coal India's production. Currently, power companies are placing very small orders and the coal major's challenge is to liquidate stocks. It is pushing coal through e-auction and proactive marketing measures.

(Source: http://economictimes.indiatimes.com/)