Calcutta | Sept. 5, 2016: Coal India Ltd (CIL) could fall short of its production target of close to 1 billion tonnes by 2019-20 unless there is an improvement in offtake.

In the first five months of 2016-17, cumulative offtake stood at 211.38 million tonnes (mt), a growth of 0.2 per cent over the year-ago period. Production at 194.81mt grew only 1.3 per cent during the period.

Thermal power plants across the country have an average coal stock position of 20 days. Therefore, Coal India is trying to manage production to prevent high inventories.

According to Partha Bhattacharyya, former chairman of Coal India, it will be a challenge for the PSU miner to improve on its output growth of 9 per cent in 2015-16 unless the demand improves. "Expecting further improvement (on 9 per cent) is too ambitious," he said at an mjunction event. Bhattacharyya said CIL could reach a production of around 800mt based on the current output trend and market situation.

According to Bhattacharyya, the falling plant load factor (PLF), a metric of the capacity utilisation level of power plants, is a major cause for concern for coal producers. "If power plants were to operate at peak PLF (around 75 per cent), it could itself create an estimated additional demand of around 120mt of coal," he said. In April-August, PLF of thermal plants, recorded by the Central Electricity Authority, stood at 59.28 per cent.

"Unless there is manufacturing growth, power consumption will not increase. Demand from domestic consumption itself will not generate more revenue," former coal secretary Alok Petri said.

Bhattacharyya said the Centre should consider allowing the use of coal in the fertiliser sector to prevent the pile-up of stock at pitheads.

(Source: http://www.telegraphindia.com/)