Written by Saurabh Kumar, Anupam Chatterjee | New Delhi |
Published: November 12, 2018 2:39:40 am
Stocks at Coal India mines fell to a five-year low of 21 million tons in October as the surge in demand for fuel from the energy sector has accelerated shipments over the past few weeks. If the low-carbon stocks in the exhaust gas continue, the supplies could be disrupted, resulting in a power outage (low availability of facilities, from a technical point of view).
The imminent difficulty has accelerated coal imports in recent months, but a wide price differential between domestic and imported coal is still a cap for imports. For comparable heat grades, imported coal is at least the third most expensive of locally available fuel, and in some cases the cost of unloading imported varieties is 1.5 times higher than local coal.
As electricity demand in the first half of this year was almost 8% higher than in the previous period, and only in October, growth was as high as 11% (growth in recent years was subdued -5), any inability of the domestic sector to meet the demand for coal could increase imports in the coming months and further burden the country's commodity trade and the overall current account deficit.
Although the annual production target of 610 million tons for Coal India set by the government seems high (in April-October the mine produced 306 million tonnes of coal; production of 50 million tonnes in October reflected acceleration) with respectable 10% per annum. Including other producers such as SCCIL, various state government entities and captive production, the country's total production in the first seven months of this year was 377 million tonnes, again 10% on an annual basis.
Total Indian coal imports grew at the fastest annual rate of 29% last year, raising concerns that coal is another important macroeconomic problem, such as oil whose large-scale imports severely burden the current account. Carbon imports have since slowed down – the increase was only 6.7% in the 18th year when imports amounted to 141mt, lower than 145mt in FY15. (Of course, in terms of value, imports were 1.38,477 crore in FY18 compared to Rs 1.04,507 crore in FY15).
The current state of low pitheads stocks coincides with the low-carbon scenario in power plants, with cumulative fuel reserves at power stations remaining critical at 10.3 mt on November 5. This is enough for plants to operate for only six days on average. Coal India sent 231 million tons of energy to H1FY19, about 10% annually.
CIL officials attribute the fall in fuel stocks to higher availability of rail tractors for fuel transportation, which has boosted deliveries. In the first six months of the 19th year, CIL loaded 202 rakes on average for the energy sector, recording an increase of 9.6%.
The operation of the Tori-Balumath and Jharsugda-Sardega railways, which are critical to the transport of coal, also contributed to the reduction of stocks, CIL officials said. –FE
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