Coal stocks at pitheads hit a 5-year low in Octoberhttps://indianexpress.com/article/business/coal-stocks-at-pitheads-hit-a-5-year-low-in-october-5441643/

Coal stocks at pitheads hit a 5-year low in October

If the low coal stocks at pitheads continues, the supplies could be disrupted, leading to power plant outages (low plant availability, in technical terms).

business news, Stocks, Coal India, Coal India mines, Coal India shares, fuel price, Indian express
CIL officials attribute the fall in pithead stocks to higher availability of railway rakes to ferry the fuel, which has boosted deliveries.

Stocks at Coal India mines plunged to a five-year low of 21 million tonne (mt) in October, as a sudden surge in demand for the fuel from the power sector has fast-tracked the dispatches over the last few weeks. If the low coal stocks at pitheads continues, the supplies could be disrupted, leading to power plant outages (low plant availability, in technical terms).

The looming difficulty has accelerated coal imports in recent months but a wide price differential between the domestic and imported coal is still putting a lid on imports. For comparable thermal grades, the imported coal is at least a third costlier than the locally available fuel, and in some cases, the landed cost of imported varieties are 1.5 times that of local coal.

Since power demand in the first half of this financial year was nearly 8 per cent higher than in the year-ago period, and in October alone, the growth was as high as 11 per cent (growth in recent years used to be sub-5 per cent), any inability of the domestic sector to satiate the coal demand could in the coming months inflate imports and put an added burden on the country’s merchandise-trade and overall current account deficits.

Though the annual (FY19) production target of 610 mt for Coal India set by the government seems a tall order (during April-October, the miner produced 306 mt coal; the October production of 50 mt reflected an acceleration), its production is growing at a respectable rate of 10 per cent annually. Including other producers like SCCIL, various state government entities and captive production, the country’s total output in the first seven months of the current financial year was 377 mt, again a 10 per cent year-on-year growth.

Advertising

India’s overall coal imports had grown at the fastest annual rate of 29 per cent in FY15, raising concerns about coal becoming another major macro-economic concerns like oil whose large-scale imports are heavy burden on the current account. Coal imports had since slowed — the growth was only 6.7 per cent in FY18 when the imports stood at 141 mt, lower than 145 mt in FY15. (Of course, in terms of value, the imports were Rs 1,38,477 crore in FY18 compared with Rs 1,04,507 crore in FY15).

The current situation of low stocks at pitheads coincides with the low-coal scenario at the power plants, with cumulative stocks of the fuel at the generating stations standing critically at 10.3 mt as on November 5. This is sufficient to run the plants for only six days on an average. Coal India had dispatched 231 mt to the power sector in H1FY19, up about 10 per cent year-on-year.

CIL officials attribute the fall in pithead stocks to higher availability of railway rakes to ferry the fuel, which has boosted deliveries. In the first six months of FY19, CIL loaded 202 rakes at an average for the power sector, registering a growth of 9.6 per cent.

The operationalisation of the Tori-Balumath and the Jharsugda-Sardega railway lines — critical for coal transportation — have also contributed to the lowering stocks, the CIL officials say. —FE