Production Gap, Project Delay Put Coal India Limited in Tight Spot

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Researched by Industrial Info Resources (Sugar Land, Texas)--State-owned Coal India Limited (CIL) is facing a double bind in 2011-12, with local supply falling 137 million tons below demand and 46 CIL coal-production projects being delayed due to environmental and other reasons.

In line with the government's annual projections for the financial year, domestic coal demand for the period is expected to be more than 696 million tons and the projected production 554 million tons, leaving a shortfall of 142 million tons. CIL will bring the shortfall down to 137 million tons by releasing 5 million tons of reserves. This indicates that the shortfall must be made up from imports, as the upside forecast for domestic production increases is uncertain, to say the least.

Pratik Prakashbapu Patil, the government's minister of state for coal, reported that progress at 46 CIL projects was delayed. The reasons given for this situation were that 11 projects were missing schedules because of lack of forestry and environmental clearances. Land acquisition, local population relief and site rehabilitation problems were causing delays in 14 projects. Lack of participation in bids was stalling nine projects, and two were experiencing delays due to adverse geological conditions.

Supply chain problems were holding up five projects, including delays in shaft sinking, supply of equipment and problems with project contractors. In addition to this litany of woes, five major projects in one development plan, with a total capacity of 35 million tons per year, were stalled for want of forestry clearance. CIL is looking for fast track solutions on land acquisition with the relevant officials, and it is holding regular progress review meetings. These problems have caused production targets to be missed over the last three years and have impacted the power industry and other heavy industry sectors. The current situation threatens to distort and overheat industrial sectors, such as power, where there is pressure from demand growth.

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