Coal production is not growing at the same pace as demand: Icra

Despite a 10.6% double-digit coal production growth by Coal India Ltd (CIL) in the first six months of the current budget, coal supply in the domestic market remains limited, the rise of production can not keep pace with growing demand. This is due to the strong recovery in electricity demand, the drop in hydroelectric power generation in the current budget, as well as healthy growth in non-regulated consumer sectors. such as cement, aluminum and steel.

Icra, in its report, stated that the shortage of coal in the country has led to an increase in imports of thermal coal by end-users in the non-regulated sectors over the past year from 75.1 million tons (tons) in the first half of fiscal 2018 to 84.7 million tons in the first half of 2019, accounting for about 68% of additional imports of thermal coal during this period.

During the monsoon season that has just ended, growth in domestic coal production slowed down to 3.8% and 3.2% respectively in September and August 2018, against 10.6% in July. 13.2% in June, resulting in a steady deterioration of coal stocks in power plants, which went from 21.1 tonnes at the end of July to around 15.8 tonnes at the end of September, the report added.

Icra Senior Vice President, Jayanta Roy, said that given the tight domestic coal availability position and strong demand from coal-consuming sectors, online auction premiums have reached 102% in September, exceeding the 95% level reached in October 2017, when coal inventories in power plants were at their lowest level. & # 39; & # 39; With the Coal India pithead stock reaching a critical level of about 18.4 tons on 30 September, against a much higher level of 55.5 tons on March 31, the ability of the central miner to organize a recovery rapid production after the monsoon would remain essential to bridge the gap between supply and demand for coal, "he added.

The coal stocks of many power plants remain essential, the dispatches the energy sector have therefore taken a higher priority, recording a faster growth of 9.6% in the first six months of this year, compared to an annual growth of only 2.8% in non-regulated sectors during the same period

According to Icra, in the medium and long term, the coal mines of Karanpura North (in Jharkhand), Mand-Raigarh (in Chhattisgarh), Korba-Gevra ( in Chhattisgarh), from Talcher (to Odisha) and Ib Valley (in Odisha) should make a decisive contribution to the production of CIL coal. ). However, given the logistics bot In some of these mining groups, the development of eight rail corridors remains essential, as these rail lines can allow an additional coal discharge of over 350 million tonnes per year (mtpa) from these mining groups. .

Widening of the gap

• The shortage of coal in the country has led to an increase in thermal coal imports by end-users
• The growth of coal production has slowed to 3.8 % in September