New Delhi: Coal India (CIL) will manage to step up production to near its targeted level despite floods hitting mining operations, top executives at the company said after analysts raised the concern that there may be an acute shortage because of disruption by heavy rains.
Ratings agency Icra estimates Coal India’s production is likely to fall short of its current year target by 55-75 million tonnes (mt).
Its target for this year is 660 mt.
Coal secretary Anil Jain said existing coal stocks have helped meet coal demand and production has picked up. A Coal India official said things will not be as bad as projected and the company is taking all possible measures to ramp up production.
Icra said Coal India has registered a year-on-year production fall of 23.5% in September 2019, as operations were impacted by flooding of key mines due to heavy rains and labour issues.
In the first half of the current fiscal, the coal miner’s production fell 6%, in stark contrast to the healthy production growth of 7% achieved in FY19, it said.
Icra said in order to achieve the targeted annual production or come anywhere close to the annual guidance, Coal India would have to step up to an average run-rate of 2.3 mt coal production per day for the rest of the year. This looks un-likely, given that in recent times Rs 35,000 cr the miner has been able to briefly sustain the 2 mt/day average coal production rate only in March 2018 and March 2019, it said.
“Coal production has been impacted by heavy rains both in CIL mines and captive mines of others,” Jain said. “But offtake from old stocks and pre-existing stocks at power plants have helped. Coal production has picked up.”
The Coal India official said the company will start producing 1,500,000 tonnes of coal by the end of October.
“Owing to torrential rainfall that lashed across its subsidiary companies, CIL’s production was dented, especially in September.
A number of high producing mines were flooded as a result of heavy rains but CIL has resilience to bounce back and is trying to regain its production,” an official said, adding there is a 17.3 mt stock at pithead that will last for another 11days.
Association of Power Producers director general Ashok Khurana said progressively increasing eauction premium is symbolic of persisting coal shortages. “With the power demand picking up, unless the coal production and despatch position improves significantly, we may have to face widespread power shortages,” he said.
Icra said coal stocks at domestic thermal power plants have depleted from 33 mt in end May 2019 to around 22 mt in end September.
Since the north-based power plants contributed around 50% of this inventory run-down, they would be more vulnerable if the ongoing production shortage persists.