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CIL to help reduce FY21 coal imports

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World Coal,

A series of measures undertaken by Coal India Ltd (CIL) is set to yield results as the country’s coal import is likely to be lowered by 90 million t in FY21.

While production dropped by nearly 1% at 596.2 million t in 2020 – 2021, against 602.1 million t during the previous fiscal, CIL was able to pump additional quantities of coal into the system, thereby prompting customers to opt for close to 90 million t of domestic coal in lieu of coal imported from abroad, said a press statement issued by the company.

The offtake was also down by a little over 1% at 573.8 million t, compared to 581.4 million t in FY20.

“Despite our best efforts, there was marginal contraction in output and off-take by 1% and 1.3% respectively on a y/y comparison due to COVD-led lack of demand,” a Senior Company Official said in the release.

Measure initiated

CIL opened a new window exclusively for coal importers in October 2020 where it allowed its subsidiaries to sign memorandum of understandings with 17 power plants linked to them to substitute their imports with its own coal for blending.

Additional coal was allocated to Central and State generating companies, under flexi-utilisation, enabling them to avert coal imports. Annual contracted quantity (ACQ) for power plants was enhanced to 100% of normative requirement from 90%. Increased quantity of coal was offered to non-regulated sectors against FSAs up to 100% of ACQ. This apart, trigger level for the power sector was elevated from 75% to 80%.

“Increased bookings in auctions was a major booster in import substitution efforts. While these actions cumulatively helped the power sector opt for domestic coal to the tune of 42 million t, the non-regulated sector (NRS) picked up the bulk of the rest,” the release said.

The company booked 124 million t of coal under five e-auction windows in FY21, which is 88% higher than the 66 million t booked in 2019 – 2020. Over burden removal (OBR) registered a growth of 17%, thereby easing the way for faster future production.

“In the absence of our import substitution measures through a host of concessions and benefits, the customers would have had no alternative than to source coal from imports. In that, it was a productive and timely move,” the release said.

Low offtake

CIL’s supplies were hit by reduced coal lifting by the power sector and a steep 31% fall in road transport. Co-ordinated efforts with railways witnessed loading from CIL’s own sources go up by 11% on a y/y basis.

“The shrinkage in supplies could have been more if not for the spate of actions and sops offered to our customers,” the official said.

The lack of demand also led to a stockpile of 99 million t at CIL pit-heads. Further production would have resulted in stocks building up even higher. With the expected revival in demand during the summer months of 1Q FY22, the company would have sufficient buffer to meet any surge and the stocks would be reduced substantially.

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India coal news