Rare Good News as Coal Supplies to Indian Power Industry on Target

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Written by Richard Finlayson, Senior International Editor for Industrial Info Resources (Sugar Land, Texas)--After many seasons of discontent, some positive news has come out of the Indian coal sector. Coal supplies to the power generation industry, the largest coal consumer in the country, which rose 12% to more than 170 million tons in the period from April 1 to October 15 this year. In the same period in 2011, supplies totaled 151.86 million tons.

Coal Minister Sriprakash Jaisawal said this performance in relation to state-owned Coal India's (CIL) (Calcutta) target of 11.2% growth for the financial year 2012-13 showed that the company was on the right track. This is the highest-ever production in a comparable period.

Coal offtake also recorded significant growth during the last two quarters, with the increased availability of rail wagons. In the April-October period, coal offtake rose 8.7% to 233.6 million tons. In terms of its offtake target, CIL needed to grow at a rate of 8.5% this year.

CIL's coal production target for 2012-13 is 464 million tons of coal. If this target is met, there will be a 9% growth rate. In the April-October period, 209.3 million tons were produced.

The minister said that CIL was ready to sign fuel supply agreements with power utilities at an 80% performance trigger level. Penalties will be imposed if there are failures to reach this level. At the 80% level, 65% would be domestic coal and 15% could be imports on a cost-plus model.

CIL envisages quantum growth in coal production during the 12th Five-Year Plan (2012-17) with the introduction of production from new coal fields. But the possibility of enhancing coal production and delivering supplies depends largely on the timely construction of railway projects for coal evacuation. The ministry and CIL have begun intensive monitoring to expedite the completion of projects on time.

The government has identified 54 coal blocks with total geographical reserves of about 18 billion tons for possible bidding.

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