Feeding The Power Sector

S Narsing Rao,
CMD,
Coal India

How is the current demand-supply situation for Coal India? 

The gap between demand and supply is widening at an increasing rate, with each passing year, especially with capacity addition in power generation. Currently (2013-14) coal demand for the whole of India stands at 769 Million Tonnes (MTs) whereas the supply is expected to be around 614 MTs. Coal India is expected to supply about 492 MTs. 

The present estimates indicate, by the end of the current Five Year Plan (2016-17) demand for coal in the country would be to the tune of 980 MTs. Of this, optimistically, the production would stay close to around 795 MTs, thus leaving a gap of 185 MTs that may have to be imported. Coal India is likely to contribute around 615 MTs during the terminal year of the current Plan period. 

76 per cent of coal consumed in India is used by the power sector and 67 per cent of electricity generated in the country comes from coal. Naturally, there has been a lot of demand for coal. However, environmental clearance issues are keeping the production at lower levels. When do you see the logjam coming to an end? 

In fact, coal fired power generation in 2012-13 accounted for 72.3 per cent of the country’s entire power generation of 911.652 billion units. This is a big leap forward considering coal based power generation was hovering around 67 per cent for the past five years. 

We have no option than to live with these delays in clearances. In fact, it is forestry clearances that cause longer delays and are more worrisome than environmental delays. But, if there are some laid down laws concerning environmental issues there is no skirting around them. The only thing is that, the clearances have to come faster or else it will be detrimental to the important energy sector of the country. As it is, the prescribed time for the clearances in itself is very long and compounding it, is the time overrun over. The Coal Ministry and CIL are working with MoEF and State governments to expedite forest clearances.

Many power companies and some cement companies have gone ahead with importing coal. Do you feel that this would impact the domestic mining activity in the long term? 

No, I don’t think there would be any impact. 

The government has been pressurising Coal India to go in for fuel supply agreements (FSAs). Do you feel that this is a step in the right direction? 

This was a decision taken by the highest stake holder in the company, the government, and CIL has assiduously followed the decision. Within the existing framework the company is gearing up to meet the supply commitments. 

How do you see FY15 panning out for CIL? 

It looks challenging, to say the least. The current estimates demand that Coal India produces 530 MTs, with offtake also hovering around the same level. The demand from the power sector, especially, and other sectors also would go up. Ramping up coal production becomes vital. We hope faster clearances happen and importantly certain rail linkages come up by then, which would serve the dual purpose of more coal evacuation and as a corollary increased production. 

Do you foresee any price hikes going ahead? 

Price increase is dependent on various cost inputs and is purely a decision that has to be taken by the Coal India Board. If and when the company feels its business economics entail price increase and if it becomes an imperative need CIL will take a call. 

Does CIL have any Capex and fund raising plans in the near future? 

Capital outlay for the entire XII Plan Period (2012-13 to 2016-17) for CIL is pegged at Rs 25400 crore. The company also hopes to invest Rs 7500 crore during the plan period on rail infrastructure and additionally Rs 7500 crore on new projects. The company is self sufficient in funds.