Power hungry India just not satisfied despite Coal India ramp-ups

Despite a double-digit coal production growth of 10.6% by Coal India Ltd (CIL) during the first six months of the current fiscal, domestic coal supply remains constrained as production ramp-ups are unable to keep pace with rising demand.

This is on the back of a strong recovery in power demand, lower hydropower generation in the current fiscal, as well as a healthy growth in production levels from non-regulated consuming sectors like cement, aluminium, and steel. Icra, in its report, said the domestic coal shortage has led to rising thermal coal imports by end-users in the last one year, increasing from 75.1 million tonne (mt) in H1 FY2018 to 84.7 mt in H1 FY2019.

During the just concluded monsoon season, domestic coal production growth slowed down to 3.8% and 3.2% in September and August of 2018 respectively, against 10.6% in July and 13.2% in June, leading to coal stocks at power plants steadily deteriorating from a high of 21.1 mt in end-July to an estimated 15.8 mt in end-September, the report added.

Icra’s senior vice president Jayanta Roy said that given the tight domestic coal availability and healthy demand from coal consuming sectors, spot e-auction premia have reached 102% in September, surpassing the level of 95% reached during October 2017. '

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"With CIL’s pithead stock running critically low at around 18.4 mt as on September 30, govt’s ability to stage a recovery in production levels after the monsoon would remain critical,” he added.

Source: DNA Money