Coal India Ltd’s (CIL) plans to get into bulk export of coal to neighbouring countries like Bangladesh, Nepal and Bhutan may be pushed to the end of calendar year 2022 as the current priority would be to meet the domestic demand.
According to sources, the State-owned miner might look at across the border sales only after the situation in domestic market has fairly stabilised. While the coal inventory position at power plants has improved to around 12-13 days’ stock, up from around three days’ stock in October, it is still below the CEA prescribed normative stock of 22 days.
In October 2021, coal stock at a number of thermal power plants were at critically low levels with as many as 107 stations having three days’ stock left as on October 3. The low coal stock was mainly attributed to the sudden spike in electricity demand on the back of a revival in economy. The heavy rains during the peak producing months of August-September also impacted production and despatch of coal. This apart, non-payment of coal dues from States also resulted in inadequate supplies.
CIL Chairman and Managing Director, Pramod Agrawal, had at one of the meetings organised by a chamber of commerce in December 2021, said the shortage of coal at thermal plants, which had triggered fear of massive power outages recently, could once again pose a problem if CIL does not ramp up production. Though there was not likely to be any challenge (of short supply) till March this year, there could be some problem in July-August 2022 if production was not increased, he had said.
Coal export a diplomatic move
CIL, which had been supplying to some of these countries on ad-hoc basis in small quantities, is likely to set aside around 3 per cent of its total annual production for exports, sources said. The move would be a part of India’s “neighbourhood first” approach which seeks to counter China’s growing foothold over South Asia. However, given the current shortage in coal supplies in Indian market, the company would first try to meet the domestic demand before turning its focus on exports.
CIL’s annual production is estimated to be close to 670-700 million tonnes (mt). So, at 3 per cent, the estimated quantity is likely to be close to 20 mt. India exported close to eight lakh tonnes of coking and non-coking coal in 2020-21, as per data available on the Coal Ministry’s website.
According to Rupesh Sankhe, analyst at Elara Capital India, coal inventory at power plants has improved to 12-13 days’ of stock. “From the point of coal inventory at power stations, we look comfortable as of now. In the medium to long term, we do not see the supply side issue because we (the country) are focussing more on renewable side. So, there is no thermal capacity coming up and the incremental 5-6 per cent demand will be met by renewable energy. In terms of exports, Coal India looking at neighbouring countries is more of a diplomatic move. China is entering in a big way into Nepal, Bangladesh, Pakistan and the Middle East and to counter that, India has to play some supporting role to neighbouring countries in terms of power or coal supply,” Sankhe told BusinessLine.
Better realisation
While on one hand it will help firm up India’s ties with its neighbours, on the other, it would also help CIL diversify its revenue stream, experts said. The price of international coal is almost 60-70 per cent higher than CIL coal. So, the company could get better realisations on its exports thereby boosting its profitability.
Coal India had recently amended its e-auction sale policy allowing across the border sale of coal bought under spot e-auction and special spot e-auctions. The move allowed domestic purchasers, including traders, to export coal procured through these spot auctions effective June 8.
Though the company would not be directly exporting, allowing those who procure coal under the two auction windows could prove to be catalytic to its sales. If there is favourable response outside the country, then it may witness more active participation as spot e-auctions book high volumes, a senior official of the company had said earlier.
Source : The Hindu Businessline
