Coal stocks: CIL faces problem of plenty

July 2, 2006 Filed Under: Coal Mining, Mining Services  

There has been a U-turn in terms of coal availability for the power sector this year with Coal India Ltd (CIL) facing a problem of plenty. Stocks have piled up at the pit-heads as the thermal power plants are not lifting the coal earmarked for them.

Currently CIL’s pit-head stocks have touched a whopping 31 million tonnes against the standard average of 17-18 mt.

Scarcity outcome

Company officials said that this situation is an outcome of the scarcity that was created last year. There was shortage in production last year and buyers were informed by CIL to make alternative arrangements following which many of them resorted to imports.

Apart from the State Electricity Board, companies such as Reliance, NTPC and Tata Power too imported large consignments of coal.

Because of delay in arrivals, many of these companies are sitting on this imported coal now and are not lifting the coal allocated to them by CIL.

CIL is in a fix because the law does not permit the company to sell coal earmarked for the power sector to others in the market. So even though there is strong demand from the small-scale sector, brick klin and various other non-linked users, the company is not able to use this coal to meet these demands.

Company officials pointed out that another factor leading to the glut situation is wrong projections made by the power plants. “The plants have given us their estimates of annual requirements based on 100 per cent utilisation of generation capacity. But they operate much below that with the national average plant load factor being a little more than 70 per cent. But our production is planned on the basis of their estimated requirement. This too has led to additions to the stocks,” officials said.

Source: www.thehindubusinessline.com