Coal India sees thermal power plants raising offtake in March

Sumit Maitra

Coal India’s own analysis has shown that there has been a marked shift in thermal generation at the cost of competing renewable energy in recent months despite renewable energy generation remaining more or less consistent in recent months with hydro generation varying as per seasons.

Thermal generation is now higher during the morning and evening peak demand hours (when renewable energy generation is low) and is also higher in absolute terms.

“This trend is expected to continue and aid coal offtake,” the company said in a presentation to analysts post third quarter financial performance announcement.

Rise in power demand is yet to get reflected fully in CIL’s offtake as power plants have been holding coal stocks of up to 34 days during lockdown, which has now fallen to 18 days.

Since power plants are mandated to keep 19 day’s stock, Coal India expects power plants to raise offtake beginning March to keep adequate stocks.

“From the highest stock of 51 million tons in July at the power stations, it has now come down to 34 mt. We have tried to compensate this (comparatively lower sales to power sector) by raising our offtake to the non-regulated sector raising it by 60-70 percent,” CIL chairman Pramod Agrawal told analysts.

“We expect the business to perform well in the short to medium-term, as the demand from power plants would witness sharp increase once their inventory levels deplete. The long-term outlook remains positive with improvement in realization and the ability of the company to protect margins by improving efficiency,” a report by Geojit Securities said.

Power demand continues to recover

Source: CIL

Consequently, demand for coal increases

Source: CIL