“CIL to substitute 100mt of imports”

With subdued demand for power, stocks of coal have reached record levels at pitheads and power plants. Coal India sees this as an opportunity to replace potential imports with increased domestic supplies. CIL director marketing Satyendra Nath Tiwari spoke to Arindam Bandyopadhyay about various steps being taken to ease supplies to consumers in this crisis period.

How does Coal India plan to offload its current stockpile which is at a record high?

The record coal stock levels at our pitheads and at thermal power stations is a result of tepid demand from the power utilities. And the current Covid-19 lockdown has further compounded to the situation. However, we consider it to be a temporary hiatus and once the demand for coal picks up our supplies will go up bringing down the stockpile. We have also introduced a slew of measures to ease the distress of our consumers encouraging them to lift more coal. We have extended the validity period for lifting of coal under all auctions without any penalty and we continue to supply coal to the Central and state Gencos despite payment defaults. The request of consumers for Usance LC is now implemented. Trigger level for post NCDP regime FSAs has been raised from 75 percent to 80 percent. The moot point is demand has to pick up.

What is the potential increase in despatch from raising commitment to power plants from 75 percent to 80 percent of ACQ?

The elevation in trigger level from 75 percent to 80 percent is applicable to those FSAs signed after the introduction of New Coal Distribution Policy. The FSA quantity of those power utilities is around 290 million tons (mt). Raising the trigger level to 80 percent is targeted at Gencos requiring more coal. If all of them opt for this, then despatches could go up close to 15 mt.

What measures are being taken to increase supply to non-regulated sectors?

With the power sector adequately boosted with coal supplies, non-regulates sectors (NRS) started receiving increased focus since the year 2019-20. As a result, CIL as whole cleared around 91 percent of backlog arrear rakes of this sector pertaining to 2017-18 and 2018-19 during FY20.

Of the 5,143 arrear rakes as of April 1, 2019 CIL liquidated 4,660 rakes at the closure of FY20. The country wide lockdown due to Covid-19 has affected the movement of coal to NRS sector also. As a relief to NRS, the consumers have been allowed to book coal under FSAs after the lockdown.

Consumers seeking to change the mode of lifting coal from Road to Rail are being allowed to do so. The validity period for lifting of coal already booked by them has been increased because of the lockdown.

NRS consumers can avail Usance LC for booking by road mode also, which was hitherto allowed only against advance payments. All these measures will boost supplies once the demand picks up.

What will be the impact of higher production and tepid demand on e-auction?

It is too early to comment on the impact scenario. However, as government is keen to boost the economy as soon as possible the demand for coal is expected to pick up once the pandemic recedes. CIL has been offering more coal under various e-auctions. As said earlier, CIL has already announced a host of relaxations including easing the e-auction reserve price at notified price whereas earlier the add on over notified price for e-auction was in the range 10-30 percent. It is expected industries will respond positively to such opportunity and CIL will be able to book a significant quantity through auction route.

What is the roadmap of CIL’s endeavor to tap the coal importing companies?

During the current fiscal, CIL is in a position to substitute nearly 100 mt of coal imports. Power sector consumers have been requested not to plan for any import of coal this fiscal as CIL has abundant availability of coal. They are being encouraged to substitute their requirement of imported coal with domestic coal of CIL by regular monthly allotments. Offer of more coal through e-auction schemes, especially for long term under special forward e-auction scheme for power producers and exclusive e-auction scheme for non-power consumers shall be made throughout this year. This shall reduce the dependence of the consumers on imports.

Is there any consideration of exporting coal in the time of surplus?

There is no immediate move in this direction. However, the prospect of exporting coal to the neighboring countries like Nepal and Bangladesh is being explored.