Coal Insights - Jan 2012

Chief Editor Rakesh Dubey, Tel: +91 91633 48159, Email: rakesh.dubey@mjunction.in

EDITORIAL

Executive Editor Arindam Bandyopadhyay, Tel: +91 91633 48016 Email: arindam.bandyopadhyay@mjunction.in

Dear Readers,

Editorial Board Alok Srivastava, General Manager, MMTC Ltd Amitabh Panda, Group Director (Shipping & Logistics Operations), Tata Steel Group Anirudha Gupta, Director, P&H JoyMining Equipment India Ltd Ashok Jain, Managing Director, Saumya Mining Ltd Deepak Bhattacharyya, Head – coaljunction, mjunction services ltd Ganesan Natarajan, WT Director, President & CEO, Ennore Coke Ltd Lawrence Metzroth, Vice President – Analysis & Strategy, Arch Coal Inc M K Palanivel, President – All India Bulk, Samsara Group P S Bhattacharyya, Managing Director, Haldia Petrochemicals Ltd S N Choubey, Head – Commercial, ABG Cement Ltd Sandeep Kumar, Managing Director, S & T Mining Co Pvt Ltd Suresh Thawani, Managing Director, Tata Sponge Iron Ltd

The temperature in much of the country dipped to new low in the first month of the year, while the coal market heated up. Coal India’s (CIL’s) migration to Gross Calorific Value (GCV) from Useful Heat Value (UHV) based pricing has created quite a ripple in India’s relatively placid energy pool.

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When the coal ministry (MoC) announced the switchover on October 14, there was hardly any objection from any quarter. “The new system will ensure a high degree of consistency in quality of coal supplies and result in high consumer satisfaction,” the MoC said. But when it was actually implemented, the new system looked hardly satisfying. The coal consumers spared barely a week’s time to register their protest. The loopholes of a hasty changeover were soon brought to the surface by all and sundry.

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The year 2012 has started with a bang!

At the centre of the rumpus is a “substantial” hike in coal prices – ranging from 5 percent to 168 percent – that belied CIL’s assurance of a largely “revenue neutral” changeover.

But it’s not just about price increase, the GCV episode has thrown up questions more fundamental in nature that should be addressed from a long term perspective.

That CIL did not have adequate number of Bomb Calorimeters and automatic samplers was known even before the new system was introduced. One may ask, then, why these consumers did not make a sound before January 1? Interestingly, it was CIL who first objected to the hasty changeover. Why didn’t the coal ministry pay heed to its plea?

When the migration couldn’t be adopted in seven years, why did MoC insist to change everything overnight, i.e. in a couple of months?

Even more bothersome are questions about CIL’s status as a corporate entity. Should the company be allowed to pursue profit motive? Or should there be a limit up to which profit aspirations can be pursued? Why must India Inc. clamour for selective laissez faire, almost always? If CIL must function as it has been all these years, why did the government go for listing at all?

Meanwhile, the month of January also marked yet another development, which was far from being controversial. Nirmal Chandra Jha, the unassuming acting CMD of CIL, was to lay down his office on January 31, nearly a year after he took over from the last full-time chairman P S Bhattacharyya. And the ministry stepped in again, recommending additional secretary Zohra Chatterji to take over as a stop-gap arrangement. One only hopes the company gets a full-time CMD at the earliest.

The early jolt this year looks indicative of much more action in the coming months. So stay tuned and keep updated.

Happy reading, Warm Regards Rakesh Dubey Chief Editor

Contents

06 | Cover Story

14 CIL succession issue poses concern 22 CIL to review GCV impact after three months

‘CIL committed to both customers and shareholders’

23 CIL to give a relook into GCV based pricing: Official

N C Jha talks about his company, himself and India’s coal fraternity.

25 Spot coking coal prices flat in January

16 | Special Focus

24 Thermal coal import prices ease marginally 25 Met coke import prices rise 30 Plan panel moots new entity for coking coal 31 CIL workers to get 25% wage hike

CIL’s shift to GCV stirs up hornet’s nest

33 Indian SEBs bleed, losses exceed Rs 200,000 cr 35 Power units surpass Dec generation target 37 MCL to foray into power sector

Coal consumers welcome GCV but denounce price rise and blame the haste.

38 India’s Nov cement production marginally up y-o-y

26 | Feature

India’s coal production growth to remain flat in next 2-3 years An analysis shows why India is posting flat growth and will continue to do so.

44 | Interview

38 Alternative fuel mooted for cement cos 39 IME 2012: A conclave for mining professionals 40 Cement makers may pass on impact of GCV 41 Alternate gases: A sustainable solution for feedstock deficit in Indian power sector?

46 Essar to set up coal fines briquetting plant 51 After coal, Emta eyes power biz 52 Production at Pachwara (N) by May-June 53 JSW to start coal mining for Bengal project 54 GCV-based pricing: Some apprehensions

P&H Joy to cash in on long-term relationships in India

56 EIA scales down 2011 US coal production estimates 58 South Africa’s 2011 coal export up 1.7%

Company to set up its first manufacturing unit, sees bright prospects for India.

59 Railways Apr-Dec commodity freight up 4.6%

47 | Corporate

BKT aims to cull 10% share in global off-highway tyre market Company sets a 2014 date to achieve its goal and reach peak production.

COAL INSIGHTS 4 January 2012

60 Essar Shipping inducts first mini Capesize vessel 60 Port traffic up 0.3% y-o-y in April-Dec 68 All India energy generation programme and PLF 80 Monthly data of offered quantity thorugh coaljunction 82 major ports through which coking coal arrived in Sept-Nov ’11

Cover Story

N

irmal Chandra Jha, the unassuming chairman of Coal India Ltd (CIL), got into the ‘hot seat' on March 1, 2011, almost by default, after the appointment of the person set to pick up the baton of the chairman of the world's single largest coal producing company got mired in delays over approvals. But, Jha, then Coal India's Technical Director, slipped into his new shoes with remarkable ease.

A mining engineer by training, Jha has spent over 37 years in CIL after having joined as a management trainee in January 1975. Without any complaint, the experienced professional handled the jobs of two functional directors — technical and marketing — as well as that of the CMD of a subsidiary company along with his official designation of that of an acting chairman. His tenure saw many major decisions being taken, including the changeover to a new pricing system for coal. The state-run miner’s decision to benchmark the pricing for non-coking coal to gross calorific value (GCV) from the current useful heat value (UHV) based gradation is expected to push up costs for cement and steel makers.

As he is readying to leave office on January 31, Jha talks to Rakesh Dubey and Arindam Bandyopadhyay at length about his days in the Indian School of Mines (ISM), Dhanbad, his growing up years as a professional and the factors that helped him succeed in life. He encapsulated the changes in the company’s functioning since the early days of nationalisation to stock market listing and becoming the most valued company in the country in terms of market capitalisation. Jha also spells out the challenges being faced by the company in terms of future growth amid the pressure of meeting the growing demand from the country’s power sector.

CIL committed to both customers and shareholders Excerpts: Let’s start from the days when you were graduating from the Indian School of Mines (ISM) at Dhanbad. What was it like then for a young man taking his first stride into the professional circuit?

When I had taken admission in Indian School of Mines (ISM), Dhanbad, the coal sector was primarily owned by private companies.

There used to be huge scarcity of jobs and unemployment for mining engineers. During the course of my five-year stint at ISM, the coal sector saw a complete transformation.

Nationalisation of mines took place and coal mines were grouped into two companies viz. Bharat Coking Coal Limited (BCCL) and Coal Mines Authority Limited (CMAL). This created a lot of job opportunities for the Mining Engineers and when I passed out from ISM, I had four offers for employment and I preferred to join BCCL as Junior Executive Trainee (JET).

Since then I had been serving coal sector.

Could you tell us about your growing up years, people you looked up to and people who influenced your life?

In the formative years of my professional career,

COAL INSIGHTS 6 January 2012

Cover Story I liked both to manage a mine and planning for a new mine. During the initial years at Sudamdih Project of BCCL, I had a chance of working with the experts from Poland as the mine was coming up with their assistance. That mine was initially set up by the then National Coal Development Corporation (NCDC) and had an in-built culture of a disciplined hierarchy of administration and result oriented goals, which created a lasting imprint in my career. Most of the leading managerial level executives from general manager down to the junior executive trainee at that time could grow in the hierarchy of management of Coal India to the highest level. People who were dedicated towards work, had integrity and who could deliver their best have always influenced me.

In another way, I can say that these principles and values have been my guiding forces.

You are among the new generation leaders at CIL. Did you ever visualise yourself being in the position you are in today?

When I took over as Director (Technical) Coal India Limited, I thought that my career had reached a peak.

Honestly, I did not envisage myself for the chairman’s slot mainly because I did not have the requisite time.

As per the PESB norms one has to have a minimum of two years service left from the date of vacancy in a particular post. When my predecessor relinquished the office after superannuating I did not have that kind of time window and so I could not formally apply for the post when it fell vacant. Owing to certain reasons I was offered the additional charge as Chairman, being the seniormost Director of Coal India at that point of time, that is, March 2011. I took the challenging assignment like any other and gave it the best that I could. I always believed in giving the best that I have, to whichever position I held in my official career.

Apart from hard work, what are the factors that have helped you to achieve success in life? Do you consider destiny as a driving force behind success?

Destiny and success are inter-related. I believe that every individual has something in store as his destiny.

That does not necessarily mean because of your destiny you will be unsuccessful. But if you are destined to be successful then your destiny will lead you to that success governed by some basic fundamentals like the time tested hard work, perseverance, honesty and sincerity. I found that they never fail you.

Success and failure are diametrically opposite but it is fascinating how only a thin difference separates them.

Perseverance always leads to success. Intellectual selfhonesty is a must to be successful in life. You have to accept to yourself what your strengths are and what your weaknesses are and work upon them.

“If you are destined to be successful then your destiny will lead you to that success governed by some basic fundamentals like hard work, perseverance, honesty and sincerity.”

As one of the longest serving executives at CIL, how do you see the changes in the company’s functioning from its formation to its listing? How do you see the future of CIL? Well, it would be a long story. I shall try to encapsulate some of the important landmarks.

The formative years of the company were really tough. Coal India was formed on November 1, 1975. Prior to nationalisation, the growth in the coal sector was less than 2 percent per annum. This was primarily due to paucity of investments caused by poor returns – coal prices being non-remunerative. By then, the High Powered Fuel Policy Committee had identified coal as a dominant source of energy for the country and a growth of more than 5 percent per annum was clearly the basic requirement to enable the country to achieve commensurate growth. Despite tremendous odds the newly found company rose to the challenge and achieved the mandate of transforming the growth rate of coal production from less than 2 percent to a CAGR of 5.3 percent.

However, while meeting the required CAGR growth, CIL developed, for obvious reasons, certain major balance sheet problems.

In other words, the sickness at birth manifested itself into a serious crisis by that time. The accumulated losses reached a peak of `2,499 crore. Also the overdue liabilities to the government aggregated to `2,229 crore.

It was at that time that the government, as a part of its new economic policy, also decided to phase out budgetary support to CIL. It was, however, decided to empower Ministry of Coal with the authority to revise coal prices once in a year by adoption of a BICP laid down formula. This enabled CIL to earn profits after long wait in 1991-92 (`167 crore). The profits gradually increased to `611 crore in 1995-96.

Since then there was no turning back for Coal India. From a level of `167 crore pre-tax profit in 1991, Coal India closed the fiscal 2010-11 with a PBT of `16,463 crore – a 95-fold increase in 20 years. Today, CIL is one of the most financially strong entities in the country. The listing of Coal India in November 2010 made history.

I have no hesitation in stating that Coal India has a bright future ahead. The company is stronger today than it was a few years back and is firmly rooted in economic and energy fronts of India. Its thinking is clear, goals are determined, paths are planned to achieve the goals set. I am sure the company will progress ahead with self-confidence, determination and unified approach. I am of the firm conviction that Coal India has a greater role to play in coming years in India’s energy and economy fronts and it shall do so successfully.

COAL INSIGHTS 8 January 2012

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Cover Story comes to the mind is a follower. There cannot be a leader without followers. Translated into corporate management parlance, read followers as a team. How does one inspire a team? By setting an example. As a leader one cannot have dual values. He has to practice what he preaches. He should not be self- obsessive but should have a larger vision of people and the organisation. Above all he has to have trust and respect in his team. A good leader should also have a keen eye in identifying the skills and talents of others and put them to the best use of the organisation.

“When one speaks of a leader what immediately comes to the mind is a follower. There cannot be a leader without followers.”

How would you describe your tenure as director (technical) as well as chairman of CIL? That is for the others to describe, is it not? However, I would say I had a satisfying tenure.

As director (technical), from the very first month of joining in January 2007 I had taken the initiative in forming policies for the company to upgrade technological status. I have also brought in the concept of newer upgraded technologies like introduction of Continuous Miner; High Wall Mining, Long Wall Technology, introduction of higher capacity Heavy Earth Moving Machinery (HEMM), expanding existing project capacity (35 million tons per annum in one case), introduction of cutting edge technologies like Coal Bed Methane, Coal Mine Methane, Underground Coal Gasification, Surface Coal Gasification etc. Two other major landmarks were induction of action plans for setting up of coal washeries in a large way to deliver quality coal to consumers and acquisition of erstwhile MAMC through joint venture approach for manufacturing underground mining equipment.

Introduction of transparency initiatives in procurement process was another important feature.

I have witnessed the steady growth of Coal India over years. I have been a part of the management in seeing the emergence of Coal India as a Mini Ratna in March 2007 to Navratna in a record time of 17 months, that is in October 2008 and then to a Maharatna in April 2011. Then there was of course the ground- breaking IPO, an astounding success.

On 17 August 2011, CIL emerged as the Most Valued Company in the country in terms of market capitalization. Just a week prior to that Coal India made it to the 30-stock sensex, on August 8, globally considered to be the barometer of the Indian economy, in short span of nine months since its listing on November 4, 2010. No other company has made it to the index in such a short time. And then Coal India’s rise to the top came in just seven trading sessions since its entry to the sensex. This is considered to be a remarkable accomplishment. Like I said earlier, it is for the others to decide on my performance. If I talk of my own performance, it may tend to become self-absorbed.

When it comes to corporate management, what are the most important attributes a leader should possess?

There are many attributes that we conventionally hear when we talk of leaders. Like intellectual honesty, not dogmatic, open minded, passionate, compassionate, visionary, assertive etc. But, essentially what is important is putting them into practice, at least a couple of them, diligently. When one speaks of a leader what immediately

What has been the most crucial and satisfying project you have undertaken in your service life?

During my professional career as a planner for BCCL mines, I had the opportunity to plan for a large number of underground and opencast mines. Many of these came up successfully and are now the backbone of BCCL, sustaining its production in the given adverse socio-technical environment. Some of the projects that can be named include Pootki-Balihari, Moonidih, Bhalgora, Block-II, Muraidih, Sendra Bansjora, etc.

CIL has been given the mandate to meet the country's coal demand, if required by import. We all know the issues that are restricting growth in domestic output.

How can these issues be solved?

Domestic output can only be increased by increased land availability, quick forestry and environmental clearances. Coal occurs beneath the earth and unless this coal bearing land is made available, how can one mine this precious energy resource? Around 90 percent of Coal India’s production comes in its opencast mines which require digging the earth which in turn requires the right to do mining.

Forestry clearances cause delays. Of late, newer terms and conditions are being imposed every time a forestry clearance proposal is taken up. A new act Forest Rights Act (FRA) was introduced in 2006. The Act has made settling the rights of all people within the forest area as a pre-condition. In addition, there is a new issue where a digitised map of the mining plan has to be prepared with the differential GPS by the company. This, then, has to be verified by the forest department. All these factors are causing delays in forestry clearance of land for mining purposes.

Any incremental production has to come from incremental areas. If incremental production comes from the same mining area, then it is deemed as a violation of the law as Environmental Clearance (EC) limit is crossed. So, on one hand the production from a mine is limited and on the other hand the demand from the industry for coal is increasing. If these

COAL INSIGHTS 10 January 2012

Cover Story

“I wish to lead a simple life, be gentle to all, and try to take decisions without compromising on my principles” bottlenecks are cleared I don’t foresee any problem in growth of domestic coal production. There is coal and there is no dearth of commitment on our part for increased coal production. The only thing is that conditions have to be made conducive.

The gap between demand and domestic availability has to be met through either increased domestic production or imports. However, looking at the international coal market scenario, it does not appear to a viable long-term solution for Indian industries. While some amount of coal necessarily has to be imported due to quality consideration, as a long term solution India will have to plan for both production and movement of domestic coal to the maximum extent in the interest of consumers, with due care to environment.

There is criticism from various quarters that post-listing, CIL is more concerned about its shareholders and not so much for the coal fraternity. Your comments.

By coal fraternity if you mean our coal consumers then it is unwarranted criticism. Customer priority for us will not diminish. We are sensitive to the requirement of our consumers. For example, during the monsoon months when our production was hit badly by unprecedented rainfall and coal supplies too suffered, in the interest of power sector, we had earmarked 4 million tons of coal for power sector which was earlier earmarked for e-auction. This shows our commitment towards our customers. For any business entity its customer base remains its solid foundation.

But then we need to run as a financially viable business entity too. We need to be sensitive to the needs of our shareholders too. They have invested in our company and we are bound to meet the confidence reposed in us by them.

How do you view the possibility of the opening up of the coal sector?

Presently coal production by the private sector is limited to their own consumption. They cannot sell the coal in the open market. It requires the amendment to the Coal Mines Nationalisation Act. Opening of coal sector for private investment is already pending in the Parliament for the last 12 years. I really do not have any comment to offer on this. However, the hunger for coal is far outpacing the indigenous production. So the alternatives are coal import and participation of private players in coal mining. Many coal blocks have been allotted to private entrepreneurs to meet their own coal requirement but unfortunately not much had happened on that front. So, it would be essential to formulate a viable strategic plan in this regard.

How do you look at yourself as a person and as a professional?

As a person, I wish to lead a simple life, be gentle to all, and try to take decisions without compromising on my principles. As a professional, I feel I have tried to deliver the best that I can and it is for others to judge how I have done.

COAL INSIGHTS 12 January 2012

Cover Story

CIL succession issue poses concern Coal Insights Bureau

T

welve months after Partha S. Bhattacharyya, the last full-time CMD of Coal India Ltd (CIL), left his office in February 2011, the world’s largest coal producer still remains headless, in true sense of the term. When N.C. Jha, the acting chairman, retires this month, the baton may be passed on to yet another interim functionary, the additional secretary of the coal ministry, Zohra Chatterji. “Not a pleasant scenario,” said a market analyst, “for one of India’s largest corporate entities and a top market-cap company.”

“The overall physical and financial performance of a company,” the analyst said, “grossly depends on its top management. Succession planning is one of the basics of good management.

This is one area where the state-owned public sector units (PSUs) are almost always lacking.”

In the private sector, the company’s board is engaged in succession planning and ensures that future leaders from within the company are given due exposure. However, in case of PSUs, the matter is decided by the concerned ministries. Besides, the companies such as CIL often lack a full-fledged board as well.

Commenting on CIL’s succession issue, Shashi Kumar, the immediate predecessor of Bhattacharyya, said the current board has an acting CMD who is also Director-Technical and DirectorMarketing (additional charge). For his entire tenure of one year as CMD, Jha survived on extensions that came in installments. Other than Jha, there are only two functional directors - Director-Finance A.K. Sinha and Director-Personnel R. Mohan Das - on the board. Even Director-Finance has additional charge of CMD, South Eastern Coalfields Ltd (SECL). There are two part time directors from the ministry and seven independent directors as well, but none of them are involved in daily affairs.

“With such a thinly populated board, how can a vast organisation like CIL, with eight coal producing subsidiaries, possibly do justice to the immense challenges facing the coal industry?” said the analyst.

Change at a crucial juncture It’s not only about the stock market or shareholders, CIL’s succession gaps are no less disturbing for the industries dependent on the company’s supply to run their plants.

The issue of stagnant production in itself is a huge problem.

Then, the issues related to supply bottlenecks, logistics and of course pricing are all very complex. CIL’s recent migration to Gross Calorific Value (GCV) from Useful Heat Value (UHF) based pricing of coal has added to the concerns. So much so that, the outgoing chairman had to engage in a number of closed door sessions with second rung management to thrash out issues and conflicts of interests.

With the industry demanding a roll back of GCV, CIL management has its hand full of woes. Also, the five-yearly wage negotiation with the workers’ unions is in the final leg. The new wage agreement is slated to be signed on January 27-28, a couple of days before Jha retires. In case the agreement is delayed, there could be conflicts of interests.

Filling the blank Against this backdrop, the coal ministry’s (MoC) decision to appoint Chatterji as pro tem functional head does not look wise. Coal minister, Sriprakash Jaiswal has announced that a full-time CMD would be appointed “in two to three months,” but going by the trend, such declarations look unconvincing.

The lacklustre approach was evident from the delayed start of the ministry to find the next chairman for this headless PSU. The process of selecting a full-time CMD for CIL commenced only in December 2011. The Public Enterprises Selection Board (PESB), which handles hiring for public sector firms, came out with an advertisement last month inviting applications from suitable candidates.

"PESB is seeking qualified candidates for the post of Chairman and Managing Director, Coal India," PESB had said on its website.

"It is requested that the names of candidates... who are found suitable for the said post as per the requirements... along with their up-to-date bio-data... may kindly be forwarded to PESB by January 23, 2012," the PESB said.

After receiving applications, PESB would scrutinise them and short-list candidates for an interview for the top job.

Earlier, the PESB had recommended Bharat Coking Coal Ltd (BCCL) chief Tapas Lahiri as the first choice and Western Coalfields Ltd (WCL) head D C Garg as the second choice for the top post in CIL. However, both short-listed candidates failed to get vigilance clearances. There is little assurance that the same issue would not recur this time around.

COAL INSIGHTS 14 January 2012

Special Focus

C

oal India’s migration to the global coal pricing system has stirred up the domestic coal market, evoking strong reactions from its consumers. Expectedly so, say industry veterans! Even though Coal India Ltd (CIL) tried to assure that the migration – to Gross Calorific Value (GCV) from Useful Heat Value (UHV) – would be largely revenue neutral, the fast and furious reactions from industry stakeholders indicate that hardly anybody was convinced. Whatever little time passed between GCV’s roll-out (on January 1, 2012) and its collective condemnation was spent in, not understanding, but picking out the already known lapses.

“It is with great regret that I say,” said former CIL chairman

Shashi Kumar, “there’s a feeling of clear betrayal of trust….It appears that even the CIL Board was under the impression that there would be marginal rise in prices, but in reality there has been a substantial increase!”

The past CIL honcho, who incidentally is now a part and parcel of the consuming segment, also put “a rough estimate” of this increase. “(It’s) anywhere between `8,000 to `10,000 crore gain to CIL topline.” All for the haste, Kumar reasoned, that a well-meaning move has turned into an alleged “abuse of monopoly status”.

But other domestic customers are not as much forgiving, it appears. While most of the user industries demand a

CIL’s shift to GCV stirs up hornet’s nest Arindam Bandyopadhyay

COAL INSIGHTS 16 January 2012

Special Focus temporary roll back, there are a few that put CIL in the spot, alleging differences in CIL’s stand vis-à-vis coal ministry’s (MoC) directive. This put the onus on the world’s largest coal producer to fend for itself. Little wonder, the outgoing CIL chairman NC Jha had a busy time sorting out issues with his senior management.

Things became further complicated after the government said it was not aware of the implications, especially the quantum of price increase, or for that matter, CIL’s inadequacy in infrastructure and instruments – automatic samplers and Bomb Calorimeters – required for seamless switch-over. The question that crops up, noted a former director of CIL, is that why then the MoC suddenly became so insistent and put pressure on CIL to implement it right away! This is a poser that everybody concerned is trying to figure out.

CCAI demands rollback Peeved at the “substantial” coal price hike due to CIL’s switch over to GCV based pricing, the Coal Consumers Association of India (CCAI) has demanded temporary rollback of the decision.

CCAI president P.K. Chand said, “Although GCV based coal pricing is the prevailing international practice, Indian coal is very high in ash content as compared to coal of Indonesia, South Africa and other countries. Such hasty conversion in pricing system has lead to a number of controversies identified by the coal consumers.”

The association has estimated the minimum coal price

increase at 5 percent, the maximum increase at 168 percent and average rise at 61 percent following the switch-over to GCV.* Chand alleged that the new pricing in “arbitrary and contrary to the guidelines of the Ministry of Coal.”

Drawing home his point, Chand said, “MoC has stressed upon making the shift of UHV grades to GCV bands revenue neutral. But CIL has increased the coal price by an abnormal proportion in the guise of price rationalisation on GCV basis.”

Interestingly, CCAI submitted its observations to MoC and met Coal Minister Sriprakash Jaiswal as early as January 8, barely a week after the conversion. According to Chand, the minister expressed his surprise at the observations brought out by the association on price increase.

Impact on industry “This steep increase in coal price will severely hamper the industrial growth of the nation when industry has already suffered from high interest rates and a shrink in factory output by more than 5 percent in recent times, conforming an industrial slowdown,” Chand said.

Turning to individual sectors, he said, “There would be a huge impact on almost all consuming sectors. For instance, the cost of cement production will go up by `8 to 10 per bag, while that of power generation will increase by `0.60 to `1.20 per unit. Also, the raw material cost for sponge iron units will increase by 10 to 15 percent,” he said. Industry sources claimed the price increase has also pushed up fuel costs for small and medium steel plants and cement units by 60 to 70 percent.

New grade prices declared by Coal India Existing grade UHV basis

Proposed new gradation on GCV basis

Grade

UHV K Cal/Kg

New Grade

A

>6200

G1

>7000

4900

4900

G2

6700-7000

4690

4690

G3

6400-6700

4460

4460

G4

6100-6400

4130

4130

G5

5800-6100

3990

3990

G6

5500-5800

2940

3430

G7

5200-5500

2060

2750

G8

4900-5200

1890

2520

B

C D

E

F

5601-6200

4941-5600 4201-4940

3361-4200

2401-3360

New GCV band

Price

Range

G9

4600-4900

1680

2230

G10

4300-4600

970

1460

G11

4000-4300

880

1320

G12

3700-4000

630

1010

G13

3400-3700

630

1000

G14

3100-3400

620

990

G15

2800-3100

620

870

G16

2500-2800

550

780

G17

2200-2500

480

680

* See annexure on pg 62 for the detailed list of price changes.

COAL INSIGHTS 18 January 2012

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Special Focus Although CIL continues with the dual pricing mechanism, charging the power sector less than the non-core sectors, the power utilities were quite dismayed by the price increase.

NTPC has expressed concern at substantial fuel cost hike and so has CESC Ltd. However, following a petition filed in the Calcutta High Court, CIL would not be able to charge additional prices from the power utilities in West Bengal, including CESC, till the middle of February. Nevertheless, the generation cost for the largest private power utility in the state has gone up by `1 per unit, company sources said.

Opposing the move, NTPC chairman Arup Roy Choudhury said, “NTPC doesn’t agree to this new method and we feel Coal India is not ready to implement this new method as well.

It requires certain technical requirements at their pit heads, at their mining stations. It will be a little premature for me to comment but on an average we feel NTPC power tariff might go up by 30-40 percent.”

The company has taken up the matter with the Power Ministry and Coal Ministry, he further added.

The increases in domestic coal prices, in February 2011 and again in January 2012, have not only pushed up generation cost, but may also put to question the viability of some upcoming projects, industry sources said. “Another observation is that CIL’s outstanding from power utilities had come down over the last 15 years, from around `8,000 crore to `1,500 crore. But it’s going up again, as power companies’ capacity to pay is decreasing by the day….In the long run, if the power sector does not grow as expected, demand for coal will drop and so will import.”

The State Electricity Boards (SEBs), meanwhile, are bleeding from accumulated losses, estimated at more than `200,000 crore. According to a recent report by Power Finance Corporation (PFC), total losses of SEBs on subsidiary received basis jumped to `44,469 crore in 2009-10 from `15,389 crore in 2007-08. The losses for 2010-11 and 2011-12, industry experts estimate, would cross `50,000 crore. There are many who blame this crisis on the increasing fuel costs as well as on the state governments who do not allow them to hike power tariffs.

Apart from these major consuming sectors such as power and cement, industries like pharmaceuticals, paper and aluminium would also take a hit due to increased fuel cost, the sources said.

Infrastructural inadequacy There are also other reservations of the industry against the shift to GCV. These include the lack of proper infrastructure and instruments required to accurately measure the GCV of coal being supplied.

For instance, the sampling process of coal remains a concern. “Coal sample collection, the most important aspect of quality, is internationally practised through automatic sampler (AMS) or Auger Sampler. Without this, the entire procedure becomes baseless,” said a source. CIL mostly undertake sampling manually at its mines.

Also, the whole system of GCV based coal pricing is dependent on actual determination of GCV through Bomb Calorimeter. In the absence of adequate number of the instrument, it is difficult to determine the actual GCV of coal of individual collieries. In this regard, Chand said, “no adequate infrastructure is available with CIL to determine actual GCV at CIL collieries”.

Other observations include ash and moisture content, sizing and impurities of Indian coal. “Despite high ash content of Indian coal, no attempt has been made by CIL to discount for high ash and moisture content. Besides, the quality of imported coal is consistent, while coal supplied by CIL is inconsistent in quality,” he said.

According to a Kolkata-based coal consumer, the GCV of imported coal varies only by 100 kCal/kg in a consignment of, say 50,000 tons, while the same in CIL supplies varies as much as 500 to 600 kCal/kg in a single rake load. Additionally, CIL does not allow joint sampling of coal at loading point for orders below 400,000 tons. This makes things worse for small consumers.

As for the sizing of coal, sources said coal supplied by CIL grossly varies in sizes which is not the case with imported coal.

Apart from usual grade slippage and sizing, CIL coal contain bulk amount of impurities such as stones, shale and boulders which are absent in imports. In a recent case, a leading power utility received a CIL supply full of soil, instead of coal, for one of its power plants.

Coal consumers are also peeved at the discrimination made

by CIL between power and non-power sectors. While Singareni Collieries Company Ltd (SCCL), another state-owned coal miner, has introduced the GCV based pricing across the board, CIL has differentiated between the consuming industries, they complained.

‘Hasty’ decision The most intriguing fact in the whole GCV fiasco, said the former CIL director, is why the ministry suddenly became so insistent on implementing the pricing measure from January 1. The proposal had been doing the rounds for quite a few years and could wait a few months more, he said.

COAL INSIGHTS 20 January 2012

Special Focus In fact, CIL had apparently expressed its reservations, sometime in October 2011, about the speedy implementation, but to no avail. In November too, it was quite clear the company was not prepared. Jha, when asked if CIL would be able to stick to the date, said, “If a decision has to be implemented, it will be implemented.”

Meanwhile, a deeper probe into the India Inc.’s concerns brings out that GCV as such is not what it is opposed to, but the haste in which the transition was made is their point of concern. “It is (switching to GCV) is actually a good job…

UHV was most unscientific…but doing a good job partially is not a good idea,” said Kumar.

Chand said, “We are not against the switchover to GCV based pricing, which is practiced internationally. But the hectic implementation has resulted in so many inconsistencies that we are compelled to demand a rollback for the time being.”

Industry suggestions Standing at this juncture, the industry suggests that the ministry and CIL temporarily roll back the transition and address the anomalies that have come out to the fore following the shift.

The suggestions, as put down by the industry, include: ♦♦ Due to high content of ash and moisture in Indian coal, price should be corrected accordingly. ♦♦ The quality issues need to be addressed before switching over to GCV based pricing. ♦♦ Embargo at joint sampling below 400,000 tons should be withdrawn. Joint sampling and third party analysis should be implemented at loading and unloading point before implementation of GCV bands. ♦♦ The price increases in different bands should be uniform keeping in line with the uniform increases in GCV. ♦♦ GCV based pricing should be uniform without sectoral discrimination which was introduced in February 2011. ♦♦ For actual determination of GCV, Auger Sampler or AMS and Bomb Calorimeters should be installed in each colliery before the shift. ♦♦ CIL should take emergent steps to increase the proportion of washed coal, which currently stands at a mere 10 to 15 percent of total supply.

Call for regulator Besides the suggestions mentioned, the industry as a whole

has demanded the formation of a coal regulator without further delay. With coal becoming such a crucial factor for the overall economic growth of the country, any arbitrary move would affect the economy as a whole.

According to Indian Coal Merchants Association (ICMA), there were gross anomalies already existing in the coal supply chain, including grade slippage, malfunctioning of weigh bridges and arbitrary price increases, among others. The current issues related to the shifting to GCV have added to these pre-existing concerns. “We think this sector badly needs a regulator,” ICMA sources said. Kumar said, “Coal regulatory authority is a must. There is a bill pending; don’t know when it will be placed.”

He further said that the monopoly situation in the domestic coal market makes the formation of an authority all the more relevant. Although CIL is a state-owned company, its outlook has allegedly changed post-listing, and the company is not doing enough to address the concerns of its consumers, he added.

Government flip-flops In the face of such growing discontent, the government looks quite tentative in its approach. While the Parliamentary Standing Committee has taken up the issue of GCV’s impact, the coal ministry has remained conspicuous by its silence.

If the CCAI representatives are to be believed, the coal minister was caught unaware about the substantial increase in prices post shifting. He had reportedly assured that the ministry would look into the matter, but no further communication has reached the aggrieved party so far.

There, however, is an expectation that following the High Court petition and combined protests, the MoC would do something to smoothen the process, if not revoking the order for the time being. The Standing Committee is understood to have started reviewing the new pricing method. CIL, on its part, is holding hectic parleys among its top functionaries keeping the outgoing chairman on his toes.

Amidst the mess, a mining consultant came out with a contrarian view. Although the transition has affected the competitiveness of consuming segments, he said, “The government had earlier shelved the proposal in 2007. A similar withdrawal this time would be further regressive.

When everybody welcomes GCV, thinks it a better system to adopt, why not stick to the same and work hard to weed out the lapses….It’s true that decision taken in haste often goes wrong. But we must keep in mind that decision delayed, in India, is seldom taken, if at all…!”

COAL INSIGHTS 21 January 2012

Special Focus

CIL to review GCV impact after three months Rakesh Dubey

A

mid much hue and cry among the domestic coal consumers, Coal India Ltd (CIL) has decided to review the impact of its shift from Useful Heat Value (UHV) to Gross Calorific Value (GCV) based coal pricing system after three months, likely in April 2012, a senior official of the company told Coal Insights. CIL switched over to GCV based pricing at the behest of the Coal Ministry with effect from January 1, 2012.

“GCV is on trial basis for three months. We will watch carefully as to where the switch will take us. If it is found that switch to GCV is leading to higher price for consumer, we will reduce the price and if it is found that the new system is leading to lower price realisation for us, then we will do the needful,” the official of the marketing department of CIL said.

“Our intention was to switch to the new system as per international norms in such a way that it is revenue neutral. Right now we do not know where it will go because our coal was never classified under GCV. So after three months, we will review the situation,” the official added.

“CIL is a very responsible organisation. Pricing is in our hands and if wanted, we could have benchmarked our price to international prices, but we have not done so either in the past or during the recent revision. Our price is still at a discount of nearly 25 percent over international prices,” the official said.

Asked about the availability of bomb calorimeter at all its mines to determine the GCV

CIL is a very responsible organisation. Pricing is in our hands and if wanted, we could have benchmarked our price to international prices, but we have not done so either in the past or during the recent revision. Our price is still at a discount of nearly 25 percent over international prices.

Measuring coal heat:GCV vs UHV

C

Coal Insights Bureau

alorific value of coal, or any fuel, is the quantity of heat produced by the complete combustion of a given mass of that fuel. For coal, the unit of heat produced is expressed in kilocalorie. It is equal to the amount of heat that raises the temperature of 1 kg of water by 1 degree Celsius at 1 atmospheric pressure (the force per unit area exerted into a surface by the weight of air above that surface in the atmosphere of earth).

However, in contrast to fuels such as oil, the calorific value of coal varies considerably depending on the ash, moisture content, impurities (sulphur) and the type of coal used. The various types of coal (non-coking) are anthracite, bituminous, sub-bituminous, lignite.

Worldwide, the heat value of coal is measured by Gross Calorific Value (GCV), also called Higher Heating Value (HHV).

However, since Indian coal has high ash content (of 30 to 50 percent), measuring Indian coal by GCV had its own problem. The government thought it would be not wise to put domestic coal at par with the same GCV coal supplied from other sources; this is so because a buyer of domestic coal would have to shelve higher amount for the same quantity of say, the same heat value coal.

Washing of coal was the solution, but India lacked (and still lacks) adequate number of washeries. Also, washing can do away with the external extraneous ash, but not inherent ash content embedded in the coal from its formation stage. Due to this characteristic of Indian coal, washing becomes, at times, prohibitive from an economic point of view (In other countries, coal is mostly beneficiated before despatch and this results in uniform quality).

Hence, the government adopted a formula to express the energy content of Indian coal in Useful Heat Value (UHV). It is an expression that takes into account the ash and moisture contents for non-coking coal. As per the Government of India notification, UHV is defined as: UHV kCal/kg = 8,900 – 138 x [percentage of ash content (A) + percentage of moisture content (M)] As per the relevant clauses of the Indian Standard Specifications, moisture and ash shall be determined after equilibrating at 60 percent relative humidity and 40 degree Celsius temperature.

This is an empirical formula and does not require experimental burning of coal to measure its heat value, which is the standard practice elsewhere. Empirical relationship of GCV and UHV is expressed in the formula below: GCV = (UHV + 3,645 – 75.4 M)/1.466 GCV and UHV expressed in kCal/kg and M denotes the percent moisture.

COAL INSIGHTS 22 January 2012

Special Focus

CIL to give a re-look into GCV based pricing: official

C

Coal Insights Bureau

oal India Ltd (CIL), which switched to gross calorific value (GCV) based pricing system from January 1, will give a re-look to existing bands of pricing, following objections raised by a large number of consumers, a top official of the company said.

“We are going to re-look at that (GCV based pricing). But in that re-look we may have to review some prices in the higher quality coal and at the same time we have to raise the prices of poor quality coal so that the overall revenue of CIL is not really affected,” the official said.

“When you say that price of Indian coal should be GCV based, the price must be linked to international prices, otherwise, what is the reason for switching over to GCV? I can understand the pain (of the consumers) as so far they have been paying certain price and now because of this GCV, the price of some coal will be slightly high. But this is being discussed,” the official added. He pointed that there was a meeting by the Government of India on January 19 and CIL is looking at it.

The official refuted the claims of a few consumer that India should not switch to GCV based pricing system as GCV should not apply to Indian coal which has generically a higher GCV. The official said that GCV is net content of coal that can be delivered and that’s the basic issue. If there is high ash content, it is required to heat that ash, it is not transferred to the water which is outside the jacket in the calorimeter and it is in-fact the net gain that can go to heat the outside jacket water, he pointed.

The basic principle is that coal is burnt and whatever net yield is available is required to burn the water outside the chamber in the jacket and the temperature that rises in the water determines the GCV of coal, he added.

“So even if there is high ash coal or high moisture coal, the GCV is the real heat that will be contributed in heating whatever apparatus you have whether it is boiler or some other thing,” the official explained.

“When you calculate the price of coal in terms of per million Kcal of heat generated, it is of the order of `900 per million Kcal for imported coal of very high quality. In comparison, we are charging only `731 per million Kcal for low heat value coal with high ash,” the official added.

He pointed that CIL provides coal to its consumers at a discount of 24 percent to 77 percent of the import parity GCV value prices. The highest price that CIL is charging is for A and B grade, which it had hiked last time in February 2011 and even that is at 54 percent discount to import parity price of imported coal. And for the lowest price that it is charging for F grade or G grade coal the discount is about 77 percent compared to imported coal, the official added.

band of coal from various mines, the official said, “CIL has about 467 mines, but it does not require as many calorimeters. Our existing resources, numbering about 40 calorimeters, including those lying at area laboratories (one laboratory for seven mines), and those lying with other organisations like CFRI and CMPDI will initially be sufficient.

“We have, however, initiated the process to purchase the required number of calorimeters so that all the mines can be examined,” the official said.

CIL had switched to 17 bands of GCV pricing ranging from 2200 Kcal/kg to 7000 Kcal/kg with different price for each band of 300 Kcal/kg against earlier system of seven grades (A to G) based on UHV for pricing of coal.

Coal consumers, meanwhile, have complained that the switch had led to a significant rise in coal prices.

It has been found that prices of erstwhile “A” grade coal (indicative GCV of over 6,401 Kcal/kg) which cost `3,690 per ton earlier for power sector consumers, has gone up by `440 to `770 per ton. For non-power sector consumers, it has gone up by `360 to `800 per ton from `4,100 per ton earlier.

Similarly, the price of “B” grade coal (indicative GCV of over 5,800 Kcal/kg and upto 6,401 Kcal/kg), which cost `3,590 per ton earlier for power sector consumers, has gone up by `440 to `540 per ton. For non-power sector consumers, it has gone up by `140 per ton from `3,990 per ton earlier.

Price of “C” grade coal (erstwhile indicative GCV of 5,400 Kcal and up to 5,801 Kcal/kg), which earlier cost `1,050 to `1,500 per ton for power sector consumers, now costs `2,940 per ton. For non-power sector consumers, it cost between `1,300 per ton to `1,860 per ton earlier and costs `3,430 per ton now.

Similarly the price of D, E and F grade coal (erstwhile indicative GCV ranging between 4,200 Kcal/ kg and 5,401 Kcal/kg), which earlier cost `570 to `1,240 per ton for power sector consumer and `630 to `1,560 per ton for non-power sector consumer, will now cost `630 to `2,060 per ton for power sector consumers and between `1,010 and `2,750 per ton for non-power sector consumers.

According to an estimate by Coal Insights, D (8 percent), E (28 percent) and F (46 percent) grades of coal account for nearly 82 percent of CIL’s total coal production, the rest being A (1 percent), B (6.7 percent), C (10 percent) and G (0.03 percent) grades.

Another interesting feature of the new pricing system of CIL is that it earlier did not bill for coal of indicative GCV of less than 3,200 Kcal/kg, but now it has introduced three bands for coal starting from GCV of 2,200 Kcal to 3,100 Kcal.

“The addition of three new bands on the lower side will definitely affect a large number of consumers,” an industry source said.

COAL INSIGHTS 23 January 2012

coal market fundamentals

Thermal coal import prices ease marginally

D

Tamajit Pain

espite an improvement in overall sentiment for the Indian imported coal market, buying activity is yet to pick up in January, according to market participants.

Trade sources said enquiries were coming in, but they were not resulting in actual buying. Some tentative enquiries were seen for standard Richards Bay 6,000 kcal/kg NAR (RB1) coal. There had also been queries for Indonesian coal with a calorific value of 5,100-5,800 kcal/kg.

With the rupee starting to gain strength, consumers of thermal coal have shown some enthusiasm for imported coal, but it will be a while before the market really bounces back, participants feel.

According to sources, the market is little changed with an estimated 8.5 million tons (mt) of stocks lying at the ports, which will take two or three months to deplete.

Meanwhile, the power sector, the primary consumer of thermal coal, has been grappling with liquidity problems and domestic coal shortage. According to observers, when domestic coal is in short supply, the power utilities, which blend imported coal with domestic coal, generally refrain from importing; instead they opt to run their plants on low capacity and resort to power cuts as they sell power at low tariffs.

Overall, the traders are waiting for increased coal buying in the first quarter of the next fiscal year beginning April 1.

Australian thermal coal of heating value of 6,300 kcal GAR is currently being offered at around $117 per ton, as against $112 per ton quoted at the beginning of January. Offers of South African thermal coal of heating value of 6,000 kcal NAR, however, have eased by $1 per ton to $105 per ton. Offers for Indonesian coal of heating value of 5,900 kcal GAR is hovering around $95 per ton, while that of heating value of 5,000 kcal GAR is at $74 per ton.

According to sources, Indonesia’s thermal coal market remained stable mainly due to lower Chinese interest during the Lunar New Year holiday. Chinese buyers were expected to return to seek coal in the spot market as early as the end of January to meet their demand. The sources said, Chinese importers have already booked enough imports for until early January and expectations that international prices would fall further encouraged them to bide their time. However, a seller said deals were still being done and some Chinese traders have been taking the opportunity to snap up cheap Indonesian cargoes at depressed price levels.

Indian buyers were reported to have returned to the Indonesian market but with low demand. Some Indian buyers showed interest in coal with a calorific value below 5,900 kcal/ kg GAR. However, they were asking for more discounts and so far no deals have been made.

In India’s domestic coal market, one significant development this month has been the shift to Gross Calorific Value (GCV) from Useful Heat Value (UHV) based pricing

Thermal coal prices Dec ’11 & Jan’ 12

of coal. The switch-over has raised a hue and cry from the consumers due to a rise in prices. While the coal ministry (MoC) and CIL are busy with reviewing the price charts, the trading community has welcomed the shift with open arms.

Meanwhile, the Indian government is expected to ease import of coal to tide over the requirement for power companies and other infrastructure utilities. According to sources, while customs duty may not be completely rolled back, a partial rollback of countervailing duty (CVD) on imports for power projects is being considered by the finance ministry.

The consideration is for relaxing the five percent CVD, if the import is specifically meant for thermal power generation or coal-based power plants and related infrastructure projects.

At present, there is a five percent customs duty on non-coking coal, besides one percent excise duty, announced on 130 items in the last Budget. This was done when the government proposed a levy of one percent excise duty on 130 items without Cenvat credit. If Cenvat credit is taken, these goods will attract a tariff of 5 percent. This applies to all categories of coal imports — lignite, peat, coke and tar, among others.

Cenvat credit means the credit availed by a goods manufacturer in the form of a deduction of input tax paid on the purchase of raw materials, fixed assets, packing material, etc, from the total tax payable to the government. CVD is also called anti-subsidy duty. The power ministry has asked the finance ministry to review the coal import duty structure.

Key coal exporting countries like Indonesia and Australia have changed their pricing in recent months, pushing the international prices substantially. Since the increase in fuel cost cannot be passed on to buyers under the existing power purchase agreements, many of these coal based projects have become commercially unviable. Moreover, there is a shortfall of availability in the domestic market. According to the Annual Plan Document 2011-12, the demand for coal in India is likely to be 696.03 mt and the projected domestic coal production is 554 mt. The gap will have to be met through imports.

COAL INSIGHTS 24 January 2012

coal market fundamentals

Spot coking coal prices flat in January Coal Insights Bureau

P

remium hard coking coal prices remained flat in January with lower offers heard from both India and China for February cargoes of Australian coal. Thin liquidity marked the global trade. Premium Low Vol prices slid to $218.50 per ton FOB Australia as against $219 per ton at the beginning of January. HCC 64 Mid Vol, however, rose by $5 per ton to $199.50 per ton fobin one month’s time.

As for Indian demand, although there was clearly some interest, not many transactions actually took place. Traders described the current marginal increase in Indian interest as a “blip,” and predicting that attractive US offers may fill some of that appetite. US mid-to-high-vol blends with 27-29 percent VM, below 1 percent sulfur, 9-10 percent ash were heard offered to India at around $215 per ton cfr.

The low demand from India was attributed to a scarcity of iron ore facing the steel sector. The Indian steel plants are still reeling under a shortage of iron ore and have reduced its coal consumption substantially.

The depreciation of rupee against the US dollar has also pushed up import prices resulting in lesser imports of the steel making raw material.

Big steel companies are being hurt the most as a large part of their coking coal requirement is met through imports. In 2010-11, domestic steelmakers imported close to 27 mt of the raw material.

The depreciation of the rupee is likely to offset any advantage companies may have gained due to a softening of coking coal prices in the second quarter, industry experts said. The rupee has fallen almost 20 percent against the dollar in the last few months. Adding to this, the lower demand for steel finished products has forced steel mills to roll over prevailing prices. This in turn has forced them to curtail capacity utilisation levels to let ends meet, resulting in lesser demand for coking coal.

Although a section of the market feels that the market has stabilised, some traders said that buyers would be unlikely to consider buying spot above the new January to March 2012 benchmark price, which is $235 per ton fob Australia for top-quality material.

Coke makers said that although the companies are being 50 percent hedged on currency, the fluctuations are having a severe impact on budgeting. There are reports that some coke makers are operating at 75 percent capacity utilisation level.

Met coke import prices rise Coal Insights Bureau

M

et coke import prices rose in January owing to some rebound in demand from steel mills.

However, till now the mills in India are faced with iron ore shortage owing to the mining ban in three districts of Karnataka and operating at lower capacity, sources said.

The import prices of met coke were hovering around $385 per ton currently, as compared to $363 per ton at the beginning of January.

LAM coke demand, which is currently at 33 million tons per annum (mtpa) domestically, is expected to shoot up to 58 mtpa in the next five years, as steel makers increase capacity, according to industry estimates.

Coking Coal Price Trends

Date

6-Dec-11 7-Dec-11 8-Dec-11 9-Dec-11 12-Dec-11 13-Dec-11 14-Dec-11 15-Dec-11 19-Dec-11 20-Dec-11 21-Dec-11 22-Dec-11 23-Dec-11 29-Dec-11 30-Dec-11 3-Jan-12 5-Jan-12 6-Jan-12 9-Jan-12 10-Jan-12 12-Jan-12 13-Jan-12 18-Jan-12 20-Jan-12

HCC Premium Peak hard coking Down coal prices fob (premium Australia low vol) fob ($/Ton) Australia ($/ton) 232 231 232 230 232 230 232 230 231 230 231 230 231 230 231 230 231 229 231 229 229 227 226 225 225 223 221 220 221 220 221 219 221 219 221 219 222 220 222 220 222 220 221 219.5 222 220 220 218.5

COAL INSIGHTS 25 January 2012

HCC 64 Mid Vol fob Australia ($/Ton) 201 198 199 199 198 200 199 199 200 200 197 196 197 196 194 195 196 196 198 198 198 198 201 200

(in $/Ton)

Semi soft Met Low Vol coking coke PCI fob coal price cfr Australia rates fob India ($/ ($/Ton) Australia ton) ($/ton) 155 145 390 153 144 390 153 144 388 150 142 388 150 142 388 151 143 391 151 143 391 150 143 391 152 143 392 153 143 392 153 146 388 153 146 365 153 146 363 153 146 363 153 146 363 153 150 363 153 150 362 153 150 362 153 149 362 154 148 375 154 148 375 153.5 148 373 150 144 385 149.5 141.5 385

Feature

India’s coal production growth to remain flat in next 2-3 years Coal Insights Bureau

B

lame it on Coal India Ltd (CIL) or the government’s warring ministries, the Indian coal sector looks fated to continue with zero production growth for the next few years, according to a study conducted by Coal Insights.

India’s coal production growth rate was stagnant in 201011 and is likely to witness a negative growth in 2011-12.

And if the current trend is any indication, the country’s coal production growth rate will either be negative or unchanged in coming years because of severe restrictions already in place.

The ground reality is that unless the existing bottlenecks – such as statutory clearances and land acquisition – are removed, the dismal production scene looks set to continue.

Also, if the current issues are not addressed on priority basis, the economic growth of the country, which was earlier estimated at 9-10 percent and now at about 7 percent, may fall to below 5 percent level due to low availability of energy.

In order to achieve economic growth, the country requires energy. Elasticity of energy to country’s GDP is currently at 0.8 percent. This implies that for the economy to grow by 10

percent, its energy sector has to grow by 8 percent. But the growth in energy sector since the last two years is almost stagnant.

India’s coal production growth, which had faltered during 2002-2007 and registered a negative growth due to demand recession, had earlier staged a strong recovery in preceding years. Coal production registered an impressive growth of 5.4 percent in 2007-08, 6.2 percent in 2008-09 and 6.8 percent in 2009-10. This was possible as there were no impractical regulations in place.

Agents of change Comprehensive Environmental Pollution Index (CEPI) Over the years, companies in India had been getting environmental clearances on time to start new projects or phases. This was the scenario until January 2010 when a pollution index named Comprehensive Environmental Pollution Index (CEPI) was put in place by the ministry of environment and forests (MoEF).

COAL INSIGHTS 26 January 2012

Feature What it implied was that till a day before the introduction of CEPI, all the projects were environmentally compliant. But the moment CEPI came in, the same projects became highly pollutant.

The circular issued by the government in this regard mandated that no further expansion project or greenfield project would be taken up from the environmental clearance point of view henceforth for the next six months. After six months, the CEPI embargo was extended for another six months and is still continuing as on January 2012.

Effectively, work on almost all new expansion projects and some ongoing projects had been curtailed to a great extent ever since the MoEF came out with CEPI two years ago.

This restriction brought the expansion plans of eight coalfields of CIL to a grinding halt. Later, seven of these coalfields were taken out of the purview of CEPI. But a delay of almost two years extended the commencement dates of a large number of company’s projects. As a result, CIL registered flat growth in coal production in 2010-11 and is on the verge of registering negative growth in 2011-12.

However, it is estimated that since CEPI restriction have been eased for CIL, the company will be in a position to start the stalled projects sometime in next two-three years and until then at least, Indian power plants will have to depend to a large extent on imported coal.

Forestry clearance Besides environmental issues, another major hurdle comes in the form of forestry clearances. It takes about eight to 10 years for a new project to get all the necessary forestry clearances in two stages and unless the proposals are cleared in Stage-I, there is no possibility of getting Stage-II clearance. And unless there is Stage-II clearance, the companies cannot go for acquisition of forestry land. Both these clearances, on an average, take about eight years.

To sort out the problem, CIL had approached the government and stated that if MoEF feels that certain area of forest land cannot be given clearance, let it be declared upfront. For areas where mining activity are allowed, let the clearance come within the prescribed 300 days.

Based on requests from CIL, MoEF came out with idea of ‘Go’ and ‘No Go’ areas. The former denotes areas where mining can be done and the later denotes places where mining is prohibited.

As a result of these classifications, not only CIL’s projects but that of private sector companies, including Essar Power, Hindalco Industries and Adani Power, got struck as well.

This was followed by hectic discussions and debating within the government, which culminated in the formation of a Group of Ministers (GoM). The GoM held a number of meetings and has recently suggested that instead of ‘go’ and ‘no go’, each individual projects would be separately examined. So basically after wasting almost two years, the

COAL INSIGHTS 27 January 2012

Feature country is back to square one and is back to the old system of getting clearances for a project in (on an average) 8 to 10 years.

Additionally, the entire process has also been made cumbersome by certain rules which state that if a company has a forest land in a mining project, it cannot start the project unless it has got a forestry clearance. For example, if it has 900 acres of mining land of which 200 hectares are forest land, it cannot get mining right unless it has the forestry clearance.

Now how does it get environment clearance? The rules say that if a company has a mining plan, it must have approval from the forest department to start mining in that area. Then only its application for environmental clearance would be entertained and if that does not happen within 18 days of making application, then it will have to re-start the process or re-submit the application.

Now when it has got the forestry clearance, there are three issues that it needs to clear. First, the Forest Rights Act compliance has to be done. Second, compliance of their rights has to be completed by a Gram Sabha which must have at least 50 percent of people being affected by the project. Every project has to complete the wild life protection plan. Third, it must have, through the differential GPS, the map of that forest.

The first two can be done and even the third can be done by the mining companies like CIL, but who will certify the GPS map that the companies provide? That will have to be certified

by Forest Department and they do not have any time frame.

Land acquisition After the hurdles of forestry and environmental clearances comes the problem related to land acquisition. The recently proposed and amended Mining Act (MMDR) has included two provisions that are sure to impede expansion of new mining projects. Firstly, the mining companies will have to share 26 percent of profit earned with the project affected people. This will be district managed funds in coal bearing areas. This proposal will significantly affect the profits of the companies, but the more threatening is the new Land Acquisition Bill.

The proposed Land Acquisition Bill says that mining companies will have to pay four times of the market price of

land to the land losers. The framers of the bill had in mind the welfare of the land losers, but gave scant regard to will be its impact on the acquirers of the land.

The impact so far has been that the mining companies are not getting land as land losers are asking them to wait for the bill to pass. Once it becomes an act, they can settle for four times the current market price.

It is to be noted here that CIL can acquire land through CBAD Act (Coal Bearing Area Development Act), but it will be only on paper as it cannot take physical possession, unless it pays compensation to land owners and compensation cannot be paid unless they are satisfied.

Demand-supply gap While submitting its production plans to the Government, CIL anticipated that some projects would get clearance by certain time. Based on its expectations, the company made its five year production plans.

In the Eleventh Five Year Plan, the production for the current year (i.e the terminal year of the plan or 2011-12) was initially projected at 520.5 million tons (mt) for CIL and 646 mt for the entire country, but then it was subsequently reduced and was brought down to 447 mt for CIL and 554 mt for the country. On the demand side too, there were periodic revisions.

The country’s coal demand was originally envisaged at 731 mt for 2011-12 and subsequently revised to 703 mt. Later on, it was revised further down to 696 mt in the mid-term review.

The mismatch between expectation and performance during the Eleventh Plan was to be blamed on the unforeseen obstacles that came up due to sudden changes in government policies, more than anything else.

Looking forward, the scenario does not look much different. For the Twelfth Plan, the Government has made two projections – one is at current rate or the business as usual scenario; and another is a higher projection or the best case scenario (considering that everything would fall in place and there would be no problem in increasing coal production).

According to the first projection, CIL will end up with a production of 526 mt by the terminal year of the Twelfth Plan (2016-17). The second projection puts CIL production at around 664 mt in 2016-17. Initially, CIL had projected a production of 660 mt for the terminal year of the Twelfth Plan, but now it has been asked to produce 664 mt. This target, however, seems achievable, subject to active support from all quarters.

Bulging imports Because of reduction in demand projection and a steeper downward reduction in production forecast, India’s coal shortage, which was to be met by imports, that was originally estimated at 51 mt in 2011-12 has been raised to 141 mt.

Volume wise, as was originally projected by Integrated Energy Policy, coal demand will go up to 2 billion tons per annum in India by 2031-32. There appears to be no let up in that as demand is still growing. This huge demand can only be met to substantial rise in import volume.

COAL INSIGHTS 28 January 2012

Feature But whether the country can meet this demand by import and whether that huge quantity can be imported into the country and whether that much coal would be available abroad at affordable price are some of serious questions that need to be answered.

Need for a forum In such a crucial juncture, it appears that there is need in India to form a forum like “Friends of Coal” that exists in the US. The country has to decide what is more important. Whether the growth of the country is more important or protecting the wild life and trees is much more important. Incidentally, “Friends of Coal” was formed in the US a few years back by coal producers and users in the aftermath of severe opposition by environmental lobbyist for the usage of coal in that country.

A question is quite often raised – can a mining company re-forest a natural forest? The miners are supposed to do afforestation after mining. But natural forest takes ages to build, and if mining companies are given all the time, probably they can create natural forest even after mining. But if the environmentalists demand that the forests should re-appear during the mining process, it is something not feasible.

Unless the country takes up a concerted approach with active participation of the state governments, the central government and the project proponents, this issue is going to become more complicated in years to come.

Demand management Under the given circumstances, India will have to heavily depend on coal especially in the aftermath of some negative impact on nuclear projects following earthquake in Japan (as the thrust on nuclear power generation has reduced and the focus is again on fossil fuel). Coal is the basic fossil fuel on which the country will depend in future.

India has abundance of coal reserve, and that too at shallow depth of 300 metres. It is to be noted that as compared to other countries, 56 percent of India’s reserves occur at swallow depth and these can be mined by opencast mechanism.

While addressing supply side concerns are important, the country also needs to realise that it cannot possibly afford to waste any amount of coal, or any form of energy source, whatsoever. It cannot afford to burn coal the way that it has been burning. There has to be a demand side management, and improved technologies for burning coal to harness the maximum energy of the dry fuel.

Not only there is need to change the process of burning coal so that energy is conserved, there are also certain issues that need to be tackled at producers’ points of view. These include the supply of quality or washed coal that would reduce the burden on existing logistics infrastructure. Unless the stakeholders of the coal sector – and that includes the entire country – gets serious about coal production and consumption, the country may have to confront serious development issues – sacrificing the high economic growth being just one of them.

COAL INSIGHTS 29 January 2012

Feature

Plan panel moots new entity for coking coal Coal Insights Bureau

I

n what could be termed as a bold recommendation, a highlevel committee formed by the Planning Commission has proposed the formation of a new coal entity exclusively to meet the coking coal needs of the Indian steel sector. The proposal was apparently mooted in view of Coal India’s (CIL) inability to step up production of the vital fuel for domestic steelmakers.

The committee has also reportedly proposed that all unallocated coking coal blocks be demerged from CIL to pave the way for the formation of the new mining company.

The recommendations have been made in view of CIL’s overwhelming focus on meeting the thermal coal demand from the burgeoning power sector.

The panel, called the Working Group on the steel sector, was constituted by the Planning Commission for the Twelfth Plan period (2012-17). As on April 1, 2011, the country has total coking coal reserves of 33.47 billion tons, of which 17.67 billion tons are proven reserves.

Although CIL holds around 90 percent of the country’s coking coal reserves, its output of coking coal has virtually stagnated during the past few years, the panel said.

As a result, the steel industry had to meet its production needs by importing 24.69 million tons (mt) of coking coal in FY10. Beginning from a level of 17.877 mt in 2006-07, coking coal imports has increased steadily over the years, the Group noted. The estimated demand for coking coal in the terminal year of the Twelfth Plan (2016-17) is estimated at around 90 mt.

“The existing coking coal mines should be de-merged from CIL and a separate coking coal company should be formed,” the Group recommended. The proposed entity can continue to be run by the government to begin with and to remain fully responsible for developing coking coal mines. Any non-coking coal that is mined in the process can be offered to CIL at a reasonable price to be fixed by the government, it suggested.

As an alternative the government can consider offering coking coal assets to steel producers for development on tender basis to go to the highest bidders. “The steel companies getting such mines should also be allowed to sell the surplus coal mines in the open market. There are several virgin coking coal assets currently lying undeveloped with CIL and for which it does not have plan for development in the 12th Plan.

These assets may be put on auction and the highest bidder may be allocated these blocks,” the Group said.

CIL, however, has opposed the idea of formation of another coal mining company only to cater to the steel industry. It has further said that steel makers should ascertain their mining capabilities before having such aspirations.

According to media reports, CIL chairman N.C. Jha opposed the proposal citing that SAIL and Rashtriya Ispat Nigam Limited (RINL) – which were given one coking coal block each namely Tasra and Mahal nearly 10 years ago – have not been able to start mining. “The Tasra and Mahal coal blocks have not been mined and understandably because these two PSUs do not have mining capabilities. So what will they do with new coal blocks?” he said.

New coal blocks for CIL? Meanwhile, the coal ministry has reportedly decided to allocate around 140 new blocks to CIL, ahead of the scheduled auction of 30 blocks expected to take place by April-May, 2012.

Allocation of new blocks to CIL may be based on the unsatisfactory performance of captive block holders most of whom were yet to start production. As of FY11, out of the 198 blocks allocated to captive miners, only 25 had started production, producing less than 40 mt of coal.

In case the ministry does not find prospective block holders, the blocks reserved for auction may also be given to CIL for mining, the reports said.

COAL INSIGHTS 30 January 2012

fEATURE

CIL workers to get 25% wage hike Coal Insights Bureau The final numbers (25 percent), however, is considerably below the initial hikes demanded by the unions.

Starting with a 100 percent increase, the unions came down to 50 percent at the third meeting on December 1112 at Bhubaneswar. The management, on the other hand, started negotiation from a 10 percent raise over current emoluments, before finally settling for 25 percent. This is much in line with the 24 percent hike given in the last wage settlement reached five years ago.

Contract workers’ wage Along with wage negotiation for permanent workers, the parties discussed and apparently came to an agreement about increasing the contract workers’ wage, the sources

A

fter four rounds of negotiations, Coal India Ltd (CIL) management has apparently agreed to a 25 percent hike on current gross salary and existing allowances of its more than 360,000 permanent workers, union sources told Coal Insights.

“Overall, the percentage increase in current gross salary and existing allowances has been agreed at 25 percent,” the sources said. The settlement about the percentage hike was arrived by five unions and the management at the meeting held in Nagpur on January 10-12.

However, while coming out of the meeting, CIL chairman N.C. Jha said, “We have offered them a kitty that we have earmarked for this purpose and have told them that we cannot go beyond the total amount earmarked.”

“A small committee has been formed which will evaluate the suggestions from both the management and the workers’ unions. Once it is finalised, a formal agreement will be signed,” Jha added.

Later, the final proposals were further discussed by the committee in Kolkata on January 22, and the signing of the agreement was scheduled for January 27-28.

While agreeing to the percentage increase, the workers have demanded rationalisation of the differences in percentage of allowances given to workers and executives.

They have also demanded post-retirement medical benefits and reimbursement of education expenses up to standard XII, union sources said.

COAL INSIGHTS 31 January 2012

fEATURE said. This is the first time an attempt is being made to include contract workers in the wage negotiation, union sources said.

According to the latest information, the management has allegedly agreed to raise contract workers’ average daily wage from current `100-125 to around `370-430, the sources said.

Apart from wage increase, contract workers are also likely to become entitled to central government dearness allowance and get outdoor treatment facility. Talks are on regarding grant of post retirement benefits.

This proposal, if it fructifies, would be a significant move both for the workers and the management. Contract workers currently comprise nearly 40 percent of CIL’s total workforce of around 600,000 (including both permanent and contract workers). Most of these contract workers reportedly get “slave like wages” and are not given any medical or post-retirement benefits, union sources claimed.

From the viewpoint of the management, giving a better deal to contract workers is important given their increasing share in production vis-à-vis departmental staff. More than 60 percent of CIL’s current production comes from this source.

However, there is a huge cost implication of this move.

While CIL does not directly bear the costs of these workers, it would have to increase the payment made to third party contractors accordingly. Payment to such contractors had increased steadily in recent years.

These hikes and benefits, however, would come in stages, and not at one go. Nevertheless, a three-fold increase in contract wages, as reported by the unions, would significantly raise total outgo on this account. Besides, the additional benefits and facilities, if offered, would add to the production costs of the company.

Coal price The moot point, from the standpoint of coal consumers, is whether CIL would go for another round of price hike to pass on the increased outgo on wage bill. CIL’s outgoing chairman N.C. Jha had earlier said, in no unclear terms, that the company would go for a price hike post wage settlement. The company had made a provision of `750 crore in the September quarter, and was expected to make an equal provision in the December quarter. The yearly provision was worked out at around `3,000 crore.

This, however, was the management’s stance before its shift to Gross Calorific Value (GCV) from Useful Heat Value (UHF) based pricing of coal with effect from January 1, 2012.

The switch-over has reportedly led to “substantial” hike in coal prices – in the range of 5 to 168 percent, according to the Coal Consumers Association of India (CCAI).

CIL’s contractual expenses

Some estimates put that the 61 percent average coal price rise (due to the switch-over) would add `7,000 to 10,000 crore to the topline and `1,500 crore to the bottomline of the coal monolith. On the other hand, the 25 percent wage hike for permanent workers is expected to raise wage bill by around `3,000 to `4,000 crore annually. However, the hike in contract workers would inflate the outgo further.

In such a scenario, it is difficult to predict whether the management would resort to another round of price hike shortly afterwards. Union sources, who had expressed reservations about price increases to pass on the incremental wage outgo to the consumers, said, “Earlier it was expected that a price rise would follow the wage settlement. However, given the gains made from the shift to GCV pricing, we feel the company may not opt for that now.”

Even Jha was recently quoted as saying that the additional revenues from the shift to GCV based pricing was likely to offset the impact of wage increase.

Meanwhile, the imminent retirement of Jha (on January 31) has made it almost obligatory for the unions to ensure that the final agreement is signed on January 27-28.

While sounding confident about getting the settlement done, union sources said even the coal ministry is interested in getting the wage negotiation over soon. Jha, on his part, had often said he wants to complete the process at the earliest.

Following Jha’s retirement, CIL would get an acting chairman in Zohra Chatterji, additional secretary of the coal ministry. The appointment of a full-time CMD may not take place until April.

“The wage part for permanent workers is over. The fringe benefits and contract workers’ wages have also more or less been agreed upon. Unless there is any unforeseen eventuality, we expect the wage settlement process to come to completion this month itself,” a union leader said.

COAL INSIGHTS 32 January 2012

fEATURE

Indian SEBs bleed, losses exceed `200,000 cr Coal Insights Bureau

T

he state electricity boards (SEBs) in India are bleeding from increased fuel costs and mounting losses that have reached staggering levels. This, despite a massive waiver 10 years back, puts to question the wisdom of respective state governments which refrain from increasing power tariffs even in the face of unprecedented rise in coal prices.

Total losses of SEBs on subsidiary received basis jumped to `44,469 crore in 2009-10 from `37,986 crore in 2008-09 and a low of `15,389 crore in 2007-08, according to the latest data available from Power Finance Corporation’s (PFC) “Report on Performance of State Power Utilities.”

The losses for 2010-11 and 2011-12, industry experts estimate, would easily cross `50,000 crore, taking the total accumulated losses to around `200,000 crore.

Incidentally, accumulated losses to the extent of `41,000 crore was waived by the Central government in September 2001 as per the recommendations of an expert group, so that the SEBs could be brought back to profit, but the current trend indicates that the purpose has not been fulfilled.

Under the waiver scheme, for the states participating in the same, 60 percent of the interest/surcharge on the delayed payment to CPSUs as on September 30, 2001 was to be waived and the remaining amount, including principal and 40 percent interest, was securitised through bonds issued by the respective state governments.

Hike in energy prices While the SEBs find it tough to survive the fuel price hikes, the Planning Commission of India welcomes a new coal price regime that would boost energy sector growth to desired level.

According to Montek Singh Ahluwalia, deputy chairman of Planning Commission of India, there is a need to raise energy prices to achieve nine percent growth in GDP. “Domestic coal prices are one-third of international rates at present. There is a need for better alignment of energy prices,” he said.

“To achieve 9 percent growth, we would be requiring about 6.5 percent growth in overall energy sector,” he said, while urging the loss making electricity distributing companies (discoms) to “raise tariffs to support the growth.” In this context, he observed that state governments often do not want the discoms to raise power charges.

According to a senior official of the power department, Government of West Bengal, the recent hike in coal prices has pushed up the fuel cost of electricity generation by a minimum of `0.75 per unit. Besides, there are other incremental costs. To

offset the cost increases, the power department has asked for an increase in tariff to the tune of `1.25 per unit.

NTPC opposes coal price hike With the new pricing norm set by Coal India Limited (CIL) for pricing of coal, India's largest power producer NTPC Limited has signaled a hike in tariff rates by as steep as 30-40 percent, according to information available with Coal Insights.

“CIL has recently expressed their intent to go in for the Gross Calorific Value (GCV) based pricing. We have given our feedback to them even though the coal major feels it is going to be cost neutral. But it is not exactly going to be cost neutral, as there will be substantial increases in tariff and therefore we have not accepted their proposition. We have taken it up with the power and coal ministries,” said Arup Roy Choudhury, chairman and managing director (CMD) of NTPC Limited.

“NTPC does not agree to this new method and we feel Coal India is not ready to implement this new method as well.

It requires certain technical requirements at their pit heads, at their mining stations. It will be a little premature for me to comment but on an average we feel NTPC power tariff might go up by 30-40 percent,” he added.

Dearth of coal Besides increasing coal prices, supply shortage continues to add to the woes of the power sector, according to industry officials. Power utilities such as Karnataka Power Corporation Limited (KPCL) are constantly demanding that CIL supply additional coal to the states, but the world’s single largest coal producing company is simply not being able to meet their demand.

Similar demands are being placed by many other power stations spread over various states such as West Bengal, Tamil Nadu, Orissa, Madhya Pradesh, Uttar Pradesh and Maharashtra. A number of power utilities in these states are currently running under ‘critical’ coal stock situation, some even facing ‘super critical’ coal stock positions.

While supply issues are beyond the control of the state governments, the tariff increase to reduce losses is well within their jurisdiction. The populist stance taken to shield consumers from additional tariff burden would not pay back in the long run. Rather, it may run into situations even more painful for the masses. Hence, government intervention for helping SEBs maintain their financial health and if possible, for securing uninterrupted coal supply, is badly needed, power sector experts informed.

COAL INSIGHTS 33 January 2012

Feature Details of losses incurred by SEBs (in `crore) 2007-08 Region

State

2008-09

2009-10

Profit/ (loss) after tax (accrual basis)

Profit/ (loss) on subsidy recd. basis

Profit/ (loss) after tax (accrual basis)

Profit/ (loss) on subsidy recd. basis

Profit/ (loss) after tax (accrual basis)

Profit/ (loss) on subsidy recd. basis

(585)

(585)

(1,005)

(1,005)

(1,412)

(1,412)

(1,201)

(1,201)

(1,048)

(1,048)

(707)

(707)

Orissa

738

738

60

60

(287)

(287)

Sikkim

(28)

(28)

10

10

1

1

West Bengal

364

364

345

345

269

269

(712)

(712)

(1,638)

(1,638)

(2,136)

(2,136)

(83)

(83)

(48)

(48)

(33)

(33)

Assam

(128)

(128)

(41)

(41)

(339)

(339)

Manipur

(94)

(94)

(113)

(113)

(106)

(106)

1

1

10

10

(56)

(56)

Mizoram

(40)

(40)

(72)

(72)

(130)

(130)

Nagaland

(81)

(81)

(68)

(68)

(111)

(111)

Tripura

25

25

47

47

(33)

(33)

North Eastern Total

(399)

(399)

(285)

(285)

(809)

(809)

Northern

Delhi

(104)

(104)

404

404

920

920

Haryana

(625)

(625)

(1,387)

(1,387)

(1,408)

(1,455)

Himachal Pradesh

(25)

(25)

32

32

(153)

(153)

Jammu & Kashmir

(1,372)

(1,372)

(1,279)

(1,279)

(2,183)

(2,183)

Punjab

(1,390)

(1,390)

(1,041)

(1,041)

(1,302)

(1,302)

(0)

(2,375)

(1,356)

(8,184)

(828)

(11,846)

(4,377)

(4,377)

(6,705)

(6,705)

(7,538)

(7,538)

(450)

(450)

(456)

(456)

(423)

(423)

(8,343)

(10,718)

(11,788)

(18,616)

(12,915)

(23,980)

Andhra Pradesh

341

(118)

352

(5,678)

424

(3,282)

Karnataka

301

266

(1,318)

(1,377)

187

20

Kerala

217

217

217

217

241

241

Puducherry

34

34

(69)

(69)

(41)

(41)

Tamil Nadu

(3,512)

(3,512)

(7,771)

(8,021)

(9,680)

(9,680)

(2,620)

(3,113)

(8,589)

(14,928)

(8,869)

(12,742)

Chhattisgarh

464

464

702

702

(433)

(433)

Goa

139

139

158

158

80

80

Gujarat

102

102

126

126

266

266

(1,827)

(1,827)

(2,824)

(2,824)

(4,078)

(4,078)

675

675

(680)

(680)

(636)

(636)

(446)

(446)

(2,519)

(2,519)

(4,802)

(4,802)

(12,520)

(15,389)

(24,820)

(37,986)

(29,531)

(44,469)

Eastern

Bihar Jharkhand

Eastern Total Arunachal Pradesh North Eastern

Meghalaya

Rajasthan Uttar Pradesh Uttarakhand Northern Total Southern

Southern Total Western

Madhya Pradesh Maharashtra Western Total Grand Total Source: PFC

COAL INSIGHTS  34  January 2012

Feature

Power units surpass Dec generation target Sanjukta Ganguly

P

ower generation by Indian power plants in December 2011 stood at 72,717.69 MU against a target of 71,241.6 MU set for the month, according to provisional data made available by the Central Electricity Authority (CEA).

The generation in December 2011 was also higher compared to 67,321.68 MU generated during the corresponding month of the previous year. The target set for December 2010 was 70,359.56 MU, the data revealed.

Earlier, the electricity generation in November 2011 was 71,033.06 MU against a target of 69,671.27 MU set for the month. Generation in October 2011 stood at 74,083.49 MU against a target of 72,905.58 MU. Of the total generation in December 2011, the thermal sector accounted for 62,710.99 MU, while 2,606.18 MU was generated by the nuclear sector.

The hydro sector contributed 7,270.46 MU and Bhutan imports accounted for the rest 130.06 MU. The target for generation in thermal sector was 61,512 MU, while that for the nuclear and hydro sectors was 2,100 MU and 7,464.60 MU, respectively. The target for Bhutan import was 165 MU. In December 2010, the achieved figures of power generation by the various power sectors stood at 57,749.66 MU for thermal, 2,415.88 MU for nuclear and 6,990.72 MU for the hydro sector.

Categorywise energy generation – December 2011 (in %)

Source: Cental Electricity Authority

The remaining 165.42 MU was contributed by Bhutan imports during the month. During the first nine months (AprilDecember) of 2011-12, the Indian power utilities had generated 652,883.93 MU, higher than 598,243.68 MU generated during the corresponding period of the previous year.

COAL INSIGHTS 35 January 2012

fEATURE Capacity addition The power utilities in India added 1,158 MW generation capacity in December 2011 against a target of 71 MW for the month, thereby exceeding the target by 1,087 MW, as per provisional data released by the CEA. The capacity added during the corresponding month of the previous year was 2,635.75 MW against a target of 2,306 MW, while the same in November 2011 was 2,807 MW against a target of 1,877 MW. In October 2011, the capacity addition stood at 345 MW against a target of 2,373 MW, the data revealed.

In December 2011, the entire capacity was added in the thermal sector which stood at 1,158 MW while capacity addition in the hydro and nuclear sectors stood at nil. The capacity addition target stood at nil for thermal sector, while the targets for hydro and nuclear sectors stood at 71 MW and nil, respectively, the CEA data revealed.

In December 2010 also, the entire capacity of 2,635.75 MW was added in the thermal sector against a target of 1,986 MW. During the first nine months (April-December) of 201112, the Indian power utilities had added a total capacity of 11,465.5 MW whereas the figure stood at 10,924.5 MW during the corresponding period of the previous year.

Critical coal stock Inadequate coal supplies by domestic coal companies and lower imports by power utilities have led to critical coal stock position at a number of Indian power plants.

According to data available with Coal Insights, a total of 46 plants of the total 89 in the country were faced with critical coal stock position of less than seven days as of December 29.

The data further shows that out of the 46 plants facing ‘critical coal stock’ position, 25 were facing ‘super critical’ coal stock position of less than four days.

On December 15, out of the 47 plants facing critical coal stock position of less than seven days, 30 were facing ‘super critical’ coal stock position of less than four days. Plants in Andhra Pradesh, Uttar Pradesh, Maharashtra, Tamil Nadu and West Bengal were the worst sufferers.

All India PLF factor – December 2011 (in %) 90 80 70 60 50 40 30 20 10 0 Central

State Sector Program

Source: Cental Electricity Authority

Pvt. Utl. Sector Achivement

All India

Achievement vs target in capacity addition (in MW)

1400 1200 1000

800 600 400 200 0 Thermal

Hydro Target

Nuclear

Achievement

Source: Cental Electricity Authority

Plant load factor The Plant Load Factor (PLF), a measure of the output of a power plant compared to the maximum output it could produce, for the country for the month of December 2011 stood at 75.83 percent against the planned 69.12 percent. The PLF was 74.45 percent and 70.69 percent for November and October 2011, respectively.

The PLF of power plants of central sector run companies like NTPC and DVC in December stood at 82.98 percent compared with 83.01 percent achieved in November 2011. The plants in the private sector recorded a PLF of 72.02 percent against the planned 67.04 percent.

The worst performer was GMDCL which recorded a PLF of 6.87 percent against a target of 75.27 percent. Muzaffarpur Thermal Power station with nil PLF against a target of 27.49 percent continued to be a poor performer. Kahalgaon Thermal Power Station, which achieved a PLF of 57.77 percent in December 2011 against the target of 87.14 percent, also fared badly.

Power supply position In December 2011, the country’s peak power demand was estimated at 81,381 MU, but actual availability was only 72,195 MU, reflecting a shortfall of 9,186 MU or 11.3 percent. Earlier, in November 2011, the country’s peak power demand was estimated at 77,277 MU, but actual availability was only 69,236 MU, reflecting a shortfall of 8,041 MU or 10.4 percent.

An interesting observation is that despite overall peak shortage of power in the country in December 2011, Lakshadweep, Andaman & Nicobar islands and Sikkim did not have any peak power shortages. Maharashtra, however, faced the highest shortfall among all states during peak period with total shortfall of 2,933 MU. Madhya Pradesh recorded the second highest shortfall during the month. The state recorded total shortfall of 1,216 MU in December 2011, against 888 MU in November. Uttar Pradesh (1,062 MU versus 831 MU in November) and Tamil Nadu (804 MU versus 751 MU in November) were the other states facing major peak period shortfall during the month.

COAL INSIGHTS 36 January 2012

Feature

MCL to foray into power sector Coal Insights Bureau

M

ahanadi Coalfields Limited (MCL), a subsidiary of Coal India Limited (CIL), is going to set up a power plant with super critical technology with a total installed capacity of 1,600 MW at the Basundhara area in Sundargarh district of Orissa, media reports said.

The power plant will be set up in joint venture with a private partner and this partner will be selected through competitive bidding, the report added.

MCL is going to be the only coal company in the country to venture into power generation. In fact, the company intends to utilise its huge undespatchable coal reserve in Basundhara and invest its own surplus funds creatively.

“The proposed coal-based power plant would be the first of its kind in the coal behemoth and is estimated to cost around `9,000 crore. It will have two 800 MW units of super critical technology,” said Kulamani Biswal, director (finance) of MCL. The coal company aims to use coal from Basundhara area in Sundergarh district which has a reserve of 6.8 billion tons of coal.

A prospective bidders’ meet was held recently in Bhubaneswar where 42 interested parties participated.

Meanwhile, the Power Finance Commission has been appointed as the consultant. “We have applied for water allocation, permission for change in land use and Environment Impact Assessment clearance,” Biswal said.

The funding pattern for the power project will be 70 percent debt with the residual 30 percent being equity. However, the management control of the power plant will rest with the strategic partner. MCL may hold 26 percent stake in the project but its share can go up to 49 percent, Biswal added.

Efforts are being given to get the necessary approvals so that the project can be made operational by 2015, Biswal further added.

According to MCL sources, MCL’s new venture started from growing coal stocks produced in Basundhara due to lack of evacuation facilities. The stock will be too high in future when the area will achieve the optimum capacity to produce 40 million tons (mt) of coal per annum.

Moreover, the surplus funds that MCL has needs to be invested as per the Central guidelines and lastly, the company, well aware of the country’s energy needs, has decided to step into the power sector in addition to coal production.

COAL INSIGHTS 37 January 2012

Feature

India’s Nov cement production marginally up y-o-y Coal Insights Bureau

I

ndia, one of the biggest cement producers in the world, witnessed a marginal increase in its November production of cement over the same month a year ago. However, there has been hardly any change in demand for the material as compared to the previous month, market sources informed.

Going forward, the sources said, demand may see an uptick post January until the advent of monsoon. However, the increase in raw material prices, especially fuel and power, may mount some pressure on margins.

Production and despatch India’s cement production by large plants, except ACC and Ambuja Cement, in November 2011 moved up 17.38 percent to 13.98 million tons (mt) compared to 11.91 mt in the corresponding month of 2010, according to information made available to Coal Insights by a member of the Cement Manufacturers’ Association (CMA).

However, total production in November 2011 was 5.41 percent lower compared with 14.78 mt in October 2011.

With this, total production during the first eight months (April-November) of 2011-12 stood at 112.82 mt, up from 108.67 mt during the same period of 2010-11.

India’s clinker production by large plants, except ACC and Ambuja Cement, in November 2011 stood at 11.28 mt, up 5.92 percent over 10.65 mt produced in the corresponding month of the previous year. Earlier, clinker production in October 2011 was 11.33 mt.

Clinker production in India during the first eight months (April-November) of 2011-12 stood at 87.06 mt, down marginally by 0.42 percent from 87.43 mt during the corresponding period of 2010-11.

India’s cement despatches by large plants, except ACC and Ambuja Cement, in November 2011 stood at 14.08 mt, up 19.73 percent as compared to 11.76 mt in the corresponding month of 2010, according to the CMA data. Total despatches in October 2011 stood at 14.38 mt, the data showed.

Despatches during the first eight months (April-November) of 2011-12 stood at 111.93 mt, up from 107.76 mt during the corresponding period of 2010-11.

Export scenario India’s cement export, except ACC and Ambuja Cement, in November 2011 stood at 0.09 mt, sharply down 35.71 percent compared with 0.14 mt in November 2010, according to the information made available to Coal Insights.

Exports during the first eight months (April-November) of

Alternative fuel mooted for cement cos Coal Insights Bureau Keeping in view the low availability of coal to the cement sector, the Government of India has asked the cement industry to look for other alternatives of the dry fuel as an energy source for production of the material.

“I do not see any immediate relief from this domestic coal problem, though it is drawing the national attention.

Hence, I would advise the cement industry to look for alternatives to coal,” P.K. Chaudhery, Secretary of the Department of Industrial Policy and Promotion (DIPP) said recently while addressing the CMA. The deficit of coal supply is on account of lower production, mainly by Coal India Limited (CIL) which accounts for 80 percent of domestic production, as well as increasing demand for the dry fuel from the thermal power plants.

“The industry is hopeful that the government will provide the much-needed infrastructure support, availability of coal and logistics support to the industry,” CMA president Vinita Singhania said.

“Unfortunately, there is no improvement in the current fiscal and the growth in the first half of the year has further contracted to about 3 percent,” Singhania added.

2011-12 was 1.1 mt, up 8.91 percent compared with 1.01 mt exported during the same period of 2010-11.

Export of clinker in November 2011 was 0.21 mt, up 10.53 percent over 0.19 mt in November 2010. Exports during the first eight months of 2011-12 stood at 1.16 mt, down 35.19 percent from 1.79 mt during the corresponding period of 2010-11.

Cement majors UltraTech Cement Ltd, an Aditya Birla Group company, reported November cement production of 3.04 mt, down 7.03 percent compared with 3.27 mt produced in October. The company’s production in November was, however, 13.43 percent higher compared with 2.68 mt produced during the same month of 2010. Cement production during the first eight

COAL INSIGHTS 38 January 2012

fEATURE months (April-November) of 2011-12 stood at 24.91 mt as against 24.77 mt produced during the same period of 2010-11.

UltraTech’s cement despatches or sales in November stood at 3.09 mt, down 3.13 percent compared with 3.19 mt despatched in October. Despatches in November were, however, 16.17 percent higher compared with 2.66 mt despatched in November 2010.

Cement despatches during the first eight months (AprilNovember) of 2011-12 stood at 24.89 mt, up marginally compared with 24.69 mt despatched during the corresponding period of 2010-11.

ACC Ltd’s cement production fell by 10.29 percent to 1.83 mt in November compared with 2.04 mt in October.

Production in November was, however, 3.98 percent higher than 1.76 mt produced in November 2010, the company said in a release.

The company’s cement production during the first 11 months (January-November) of 2011 stood at 21.63 mt, up

12.01 percent against 19.31 mt produced during the same period of 2010, the release said.

In sync with a fall in production, the company’s despatches or sales in November fell by 7.11 percent to 1.83 mt from 1.97 mt in October. However, despatches in November were 5.17 percent higher compared with 1.74 mt despatched in November 2010.

Total despatches during the first 11 months of 2011 stood at 21.59 mt, up 12.24 percent compared with 19.24 mt despatched during the corresponding period of 2010, the statement added.

Ambuja Cement Ltd’s November cement production stood at 1.81 mt, same as in October, but 25.69 percent higher compared with 1.44 mt produced in November 2010.

The company’s despatches or sales during the month of November of 1.83 mt showed an increase of 2.81 percent over 1.78 mt in October and a rise of 28.87 percent over 1.42 mt in November 2010.

IME 2012: A conclave for mining professionals

A

Coal Insights Bureau

bout 70 eminent speakers from India and abroad will debate, deliberate and exchange views on the key issues for the mining and allied sectors in Asia at the 4th Asian Mining Congress, to be organised in Kolkata during January 28-31. The conclave of mining and mineral professionals, policy makers, industry experts, scientists, engineers and technological associated with mining and allied sectors will be organized by The Mining, Geological & Metallurgical Institute of India (MGMI).

The concurrent 4th International Mining, Exploration, Mineral Processing Technology and Machinery Exhibition – IME-2012 will be held during the period. The biennial event is supported by Ministries of Coal, Mines, Steel, Power, Heavy

Industries, Defence Production, Govt. of India, mineral rich state governments, corporate and industry as a whole.

The event assumes importance as India is the world’s largest producer of mica blocs and splitting, third in global chromite, coal, lignite and barites producers, fourth in the production of iron ore etc. It is estimated that 82 billion tons of reserves of various minerals is yet to be tapped.

Organised in association with Tafcon the 4th International Mining Exploration Mineral Processing and Machinery Exhibition (IME) provides an ideal forum for the miners, planners and policy makers to discuss the various issues affecting the mining industry in the Asian region in particular, and also in the rest of the world. The event provides an excellent business opportunity for the manufacturers of mining and allied industry to showcase their technologies, new initiatives, products and services to the global audience. Around 250 stands, 600 delegates, 15,000 trade visitors and 25 countries are expected to participate in this event.

The International Mining Exhibition 2012 will have participants among machinery and equipment manufacturers, exporters and importers, professionals and trade visitors from India and overseas, foreign missions and industry associations. The event is a unique platform for entrepreneurs, decision makers, senior government officials, investors, industry members, traders, equipment buyers & suppliers, academia, miners, engineers and trade delegation to congregate, brainstorm, showcase and forge meaningful partnerships for business.

COAL INSIGHTS 39 January 2012

fEATURE

Cement makers may pass on impact of GCV Coal Insights Bureau

I

n the face of an increase in domestic coal prices due to the recent change in Coal India’s (CIL) pricing mechanism, the Indian cement makers may resort to a price rise to pass on the increased fuel cost to the consumers, a senior official of a leading cement manufacturer told Coal Insights.

“The market demand is improving. If the demand remains strong, we will certainly try to pass on the higher fuel cost,” the official said. The cement makers are estimated to suffer a significant hike in fuel cost due to CIL’s shift to Gross Calorific Value (GCV) from Useful Heat Value (UHV) based pricing of coal with effect from January 1, 2012. However, as the cement industry does not consume much of coal, compared to the power sector, the price increase may not be significant. “This will be done only to protect the margins,” the official said.

Coal bill up 60% Meanwhile, the total coal bill for various cement units has increased by around 60 percent following the introduction of GCV based pricing in India, industry sources said. Another estimate showed the cost has gone up by `8 to 10 per bag.

“The total coal bill for cement units for the same quantity of coal, sourced from the same mine, has gone up substantially following this shift,” the sources said.

For instance, the total cost of coal for Birla Cement’s Chanderia plant, which sources coal from New Kusmunda-I mine has increased by 61 percent. The basic price of this coal – which comes under the category of 4,000-4,300 kCal/kg GCV – has gone up from `740 per ton to `1,320 per ton.

Similarly, the cost of coal procured by the Kota plant of DCM Shriram has increased by around 77 percent, with other

Cost increase for Birla Cement Works, Chanderia Colliery

New Kusmunda-1, SECL Old (Rs/ton)

New (Rs/ton)

Increase %

Grade/CV

ROM-F

4000-4300

Basic price

740.00

1320.00

78

Royalty (`55+5% on Basic price)

92.00

121.00

32

SED

10.00

10.00

0

Transport charges

44.00

44.00

0

Sizing charges

61.00

61.00

0

Central Excise Duty @ 5.15%

43.52

73.39

69

Niryat Kar .20% on coal value plus sizing charge

1.60

2.76

73

CG. Dev. Tax

5.00

5.00

0 0

CG. Env. Tax

5.00

5.00

Energy cess

50.00

50.00

0

Central Sales Tax @ 2%

21.04

33.84

61

1052.12

1692.15

61

Coal cost

Cost increase for DCM Shriram, Kota Colliery

Bishrampur, SECL Old (Rs/ton)

Increase

New (Rs/ton)

%

Grade/CV

ROM-D

5200-5500

Basic price

1440.00

2750.00

91

142.00

207.50

46

SED

10.00

10.00

0

Crushing charges

39.00

39.00

0

Transport charges

99.83

99.83

0

5.00

5.00

0

Royalty

Vikas Upkar Parivaran Upkar

5.00

5.00

0

81.00

149

84

Clean energy cess

50.00

50.00

0

Central Sales Tax @ 2%

37.00

66

78

1908.83

3381.33

77

Central Excise Duty @ 5.15%

Coal cost

costs (crushing and transportation charges) remaining the same. The basic price of coal, sourced by the Kota plant from Bishrampur mine, has increased from `1,440 per ton to `2,750 per ton following the switch-over.

“As a result of the increase in basic prices, the royalty, central excise duty and sales tax components have also gone up. Even if other costs remain the same, this will result in substantial rise in overall coal cost for cement units,” the sources said.

Demand improving While the fuel cost increase has come as a setback, the improving demand is expected to bring some relief to the cement makers in the country. “Cement demand generally improves from mid-January and stays firm till June. This year too, we are expecting the demand to improve, going forward,” said an industry source. Things are likely to remain conducive as the capacity addition spree has come to an end.

“Overall, the demand growth this year (FY12) is likely to be around 5 percent. Although this is below the 9 percent growth anticipated earlier, we are positive about the coming months,” the source said. To a question, he said that domestic industry does not face any threat from international competition.

As for the fuel costs, he said, “The power and fuel costs comprise 32 to 35 percent of total production costs. About 75 percent of the coal comes from linkages. Some quantity is also imported.”

On the whole, the source said, the impact of the price rise would not be severe for the domestic cement manufacturers and whatever cost hike the industry would suffer, would be passed on to the consumers, if demand remains firm.

COAL INSIGHTS 40 January 2012

Special fEATURE

Alternate gases: A sustainable solution for feedstock deficit in Indian power sector?

Coal Insights Bureau

Rising prices and unavailability of conventional feedstocks such as coal and gas have compounded the problems and the entire Indian power sector is in crisis situation. Can alternate gases such as shale gas and CBM offer a potential long term solution to the crisis? What factors would be essential for successful exploitation of alternate gas potential in the country? Shardul Kulkarni & Binay Agrawal share their views with Coal Insights.

T

he state of India’s power sector has to improve to help India sustain its high economic growth. According to the Twelfth Plan draft report, India will need to add 75 GW over the next five years to support its target of 9 percent per annum of GDP growth. It would require an investment of $210 billion, half of which is expected to come from the private sector. The current situation, however, does not inspire much confidence.

India is expected to be significantly deficit in coal and gas, the two major fuels accounting for 65 percent of total power generation capacity in India.

Import of fuels to meet the deficit is expected to remain a much more expensive option. Introduction of market linked pricing in Indonesia, a major source for coal import to India, increased coal prices by 30 percent last year. Imported LNG is nearly three times costlier than domestic gas.

The feedstock challenge

Alternate gas: A potential game changer

Plants with capacity of 5,600 MW commissioned in FY10 are operating at only 42 percent of capacity, thanks to shortage of feedstock. Power plants under construction are facing delays and planned projects are being put on hold. Rising fuel prices and unavailability of coal/gas along with low tariffs are making these projects unviable.

Alternate gases could offer a potential solution in this crisis.

India has huge reserves of shale and CBM gas.

Conventional fuels for power sector, FY 16

Gas reserves in India Source Natural gas

Estimated reserves (tcm1, 2010) 1.5

Alternate gas CBM Shale gas

2-2.6 1.5

Source: Industry reports, Analysis by Tata Strategic

The shale gas reserve is an initial estimate by US Department of Energy (DOE). The actual estimate by govt. of India is expected to be published in 2012 and reserves could be far more than 1.5 tcm.

Combined reserves of shale gas and CBM in India are two to three times the natural gas reserves in the country.

Successful exploitation of such large reserves of alternate gas could potentially change the energy scenario in India.

Source: Analysis by Tata Strategic

COAL INSIGHTS 41 January 2012

Special fEATURE Alternate gas in the US: A success story The US was a major importer of gas till 2000. Due to reduced availability of conventional feedstocks such as coal and natural gas, the US sought to diversify its fuel sources. Shale gas and CBM emerged as major alternatives.

Due to large discoveries and commercial exploitation of alternate gases, share of gas based capacity has increased from 11 percent in 2000 to 28 percent in 2010.

Apart from government support, various other factors contributed to the success of alternate gas in the US: • Commercialization of horizontal drilling technology for shale gas • Adequate infrastructure • Deregulated regime With the success of shale gas, the US has become not only self-sufficient in gas but also a net exporter of gas. Another major impact is seen in terms of 50 percent reduction in gas prices to $ 4.2/mmbtu in 2010 from the peak of $ 8/mmbtu in 2008.

The US success story suggests that with the right regulations and adequate infrastructure, alternate gases could significantly impact the energy scenario in a country.

Implications for India Currently 18 GW of power plant capacity in India is gas based. These power plants consume 28-30 bcm of natural gas annually.

India could potentially add additional 18 GW of gas based power plant capacity if it were to produce 30 bcm of shale and CBM gas annually. With combined CBM and shale gas reserves estimated at twice the natural gas reserves in India, this target appears to be achievable with focused efforts.

India, too, could create a new source for itself and aim for lower energy prices. This is critical for sustainable development of power projects. The question is how soon we address the bottlenecks to leverage the alternate gas reserves in the country.

Critical success factors and India’s position While India is well placed in certain factors, the factors that would decide the future of alternate gases in India are access to resources and freedom to market/ price.

Access to resources: It is important to acquire drilling rights with ease and allay the environmental concerns related to alternate gas E&P. A number of alternate gas reserves in India have human habitation and securing drilling rights in such lands could be a challenge. Environmental concerns with hydraulic fracturing, particularly in case of shale gas E&P, include the potential contamination of ground water, mishandling of waste, etc. Wise choice of location (uninhabited) along with adoption of best practices from developed markets such as the US could help successfully exploit the alternate gas potential in the country.

Some of the best practices from the US include: • Casing and cementing to isolate gas-producing zone from aquifers • Limiting the water usage by controlling vertical fracture growth • Establishing emission measurement system to monitor and control pollutants Freedom to market and price: India follows a priority sector gas allocation and pricing policy. Fertilizer, power, LPG and city gas distribution are given priority in gas allocation, in that order. The restriction to market and price has delayed

USA, Fuel sources for electricity generation

COAL INSIGHTS 42 January 2012

Special fEATURE

Critical success factors and India’s position

investment in CBM blocks and is expected to impact development of other alternate gases as well. The purpose of subsidised pricing is to supply gas at an affordable price to strategic sector. However, if the same pricing regime impacts investment in gas exploration and production, the whole purpose of the policy is defeated.

A more progressive approach could be followed in gas pricing to attract investment in the sector. A pricing mechanism that has a fixed component (subsidised price) and a variable component (reflecting the price of imported LNG) could be worked out for the benefit of all stakeholders.

Slow progress till now CBM is the first alternate gas that India has started to explore.

The first CBM auction occurred in 2001. As of now, four rounds of auctions have been completed in which blocks with combined reserves of 1.8 tcm have been awarded.

The blocks awarded are yet to make any progress. CBM production in India is currently estimated at 0.1 bcm. This is way below the potential that CBM blocks offer.

Shale gas policy is yet to be formulated. It is most likely to be announced by end-2013. The interest from private sector has outpaced legislation making. RIl and GAIL have already

bought shale gas assets in USA whereas OIL, IOCL, BPCL are looking at acquiring shale gas prospects abroad. While the progress has been slow till now, the future holds promise.

With the right strategy we could successfully develop the alternate gas potential in the country for our energy security.

Observation The power situation in India is going from bad to worse.

Drawing from the US experience, alternate gases have the potential to significantly address feedstock issues for India’s power sector. As with each opportunity, there also exist several challenges. Addressing the issues related to drilling rights and a free hand in marketing of alternate gas are the imperatives for attracting investments in this sector. This could be a potential game changer in addressing the feedstock deficit of Indian power sector in the long term.

Shardul Kulkarni is Principal at the Tata Strategic Management Group (TSMG) with 11 years of energy sector experience in consulting and investment banking. He is Certified Energy Auditor from BEE, an offshoot of Ministry of Power, India. Binay Agrawal is an Associate Consultant at TSMG. He completed Post Graduate Diploma in Management from IIM, Ahmedabad and has worked on several strategy consulting projects.

COAL INSIGHTS 43 January 2012

Interview

P&H Joy to cash in on long-term relationships in India Coal Insights Bureau operations-focused P&H Mining Equipment or “P&H.” The Joy business concentrates primarily on supplying and supporting high-productivity equipment to coal extraction.

P&H supplies drills, shovels, loaders, draglines, and also crushing and conveying systems for coal, copper, iron ore, petroleum, gold, phosphates and diamond operations.

Joy Global posted $4.4 billion in revenues during fiscal year 2011 against $3.5 billion in fiscal 2010 and $3.6 billion in fiscal 2009.

Which are the growth pockets for the global mining equipment industry? How is India placed in the global mining map?

Anirudha Gupta, Director, P&H Joy

P

&H Joy Mining Equipment India Ltd or P&H Joy, a fully-owned Indian subsidiary of US-based Joy Global Inc., a worldwide leader in high-productivity mining solutions, is all set to set up its first manufacturing facility in West Bengal in India.

In a free-wheeling interview with Coal Insights, director of P&H Joy, Anirudha Gupta, talks about the upcoming project, the company’s future plans, his outlook on India and China, and on the coal sector in general.

Excerpts: How exactly is Joy Global Inc. placed in the global mining equipment market in terms of market share, reach, growth and competition?

Joy Global Inc. is among the top-tier suppliers of equipment and service support to surface and underground mining operations worldwide, and the competition within that top tier is intense with the likes of great companies like Caterpillar, Komatsu and Hitachi. Great competitors make for a great mining industry. Improvements are continuous. The focus is on optimising safety and efficiency.

Joy Global consists of two operating units – underground operations-focused Joy Mining Machinery or “Joy” and surface

All of the world’s mining regions are experiencing significant growth in response to the continuing growth in demand for consumer and industrial goods and services worldwide. India is among the fastest-growing economies in the world and its mining industry is investing in high-productivity mining equipment and systems to meet demand for energy, consumer and industrial goods.

India’s economy provides goods and services for nearly 1.2 billion minerals and energy consumers. Currently, India is a net importer of commodities including crude oil, natural gas, fertilizer, iron and steel. It also consumes over 600 billion kilowatt hours of electricity annually and imports over 5 billion kWh each year – a key driver in the ongoing expansion of India’s thermal coal mining industry.

Overall, the global mining industry now supports over 7 billion energy and minerals consumers. By the year 2050, the mining industry will need to support an estimated 9 billion minerals and energy consumers.

P&H Joy Mining Equipment has recently announced its plan to set up its first manufacturing centre in India. Could you elaborate on the project?

Kolkata-based P&H Joy Mining Equipment India Limited (P&H Joy) on January 11 announced plans to establish a new 25-acre manufacturing and servicing facility in an engineering and technology park being developed by Bengal Aerotropolis Projects Limited (BAPL) within the Asansol Durgapur Planning Area. This $25-million state-of-the-art facility will employ an estimated 112 people in its first phase and it will become operational in 2013. It is believed to be the largest US development in the state after the food processing unit set up

by Frito Lay, a PepsiCo company, in 2004.

COAL INSIGHTS 44 January 2012

Interview The first-phase operations will be focused on welded fabrication of mining equipment structural components and a state-of-the-art service centre. The second phase will enable P&H Joy to make transmission equipment and the third will focus on electrical products. While specific time frames for the follow-on phases are not yet set, the new facility in Durgapur will also feature a new “smart services” equipment monitoring and diagnostics centre aimed at helping mine operations optimise the reliability and productivity of their surface and underground equipment, in the first phase.

What made you take this plunge when many other overseas players cite lack of volume and continue to import for the Indian market?

P&H Joy has been invested in supplying and supporting the mining industry within India over several decades. We have developed valuable and enduring supply relationships with India’s established and emerging mining operations. Those operations are preparing now for the increasing demands of the future as India continues to transition its economy. The demands upon our mining industry will continue to grow as a result of derived demand from consumer and industrial goods and industries.

What is the current product portfolio of P&H mining in India? What steps are you taking to improve your service quality?

Our current product portfolio applied to coal operations in India consists mainly of small- to mid-capacity electric mining shovels representing somewhat older controls technology.

However, we are preparing now to introduce cutting-edge, ultra-class electric mining shovels to India’s mining industry, and we are positioned as well to provide the most modern wheel loaders, walking draglines, drilling rigs, and in-pit crush-convey systems for exceptionally low cost-per-ton production metrics.

We have an established, veteran service support team based in Kolkata. That team will grow in terms of numbers and advanced-technology service support expertise as our customers invest in more cutting-edge mining equipment and systems.

What are the major hurdles a foreign equipment maker setting up base might face in this country?

Working knowledge of the economic, social and political environment is essential. Our presence within India’s mining industry has always been driven by a deep well of talent from within this nation. We are local. We are deeply woven within the fabric of India’s mining industry and essential institutions.

Lacking that depth, lacking that investment in human resource talent from within India can be a major hurdle. India is our home. We are here to help build an even greater India as the exciting future unfolds.

In this regard, how different is the situation in China?

P&H began to explore ways to introduce its surface mining equipment and support to China during the late 1970s.

Interestingly, the first P&H digging machines within India go all the way back to 1926 with some sturdy, 1-meter-capacity shovels applied to construction projects in Mumbai.

P&H shovels have been applied to coal and iron ore operations in China since the 1980s. Those shovels were sourced from a P&H licensee in Japan, Kobe Steel – as were the shovels that P&H has placed within India’s mining industry.

P&H has been investing in manufacturing and support in China over the past decade, keeping pace with increasing demand for modern mining equipment. As India’s mining industry has begun to transition to more of a high-production, high-efficiency model, P&H and its parent company Joy Global have anticipated that turning point and are responding with investment in the new operations coming soon to Durgapur.

Joy Global prefers to be called an innovator rather than a technology provider. Could you name some recent ‘innovations’ offered from its stable?

In terms of shovels alone, P&H is continuously innovating and improving its technology. Today’s P&H shovels feature highefficiency operator cabs loaded with advanced ergonomics, communication, command and control systems that help shovel operators remain alert, comfortable and productive throughout 12-hour work shifts.

P&H shovel dippers are optimised for highly efficient, reduced-energy-consumption performance within coal overburden, copper, oil sand and other applications.

P&H shovels are also equipped with a powerful supervisory control and data acquisition system that helps keep track of machine health and performance. That system is now linked to a powerful remote health monitoring system that enables P&H to greatly reduce the amount of time needed to diagnose systems health issues and restore P&H shovels to peak operating performance for reduced cost mine operations.

Joy’s continuous improvements in their Long wall equipment and Continuous Miners in term of efficiency, safety and productivity, has made them the leading innovator in underground mining industry, worldwide.

What are your views about the stagnated production in the Indian coal sector? Could you suggest measures for unlocking the stalled growth and improving productivity?

Progress is well under way right now, though not highly visible.

Mine operations managers and forward thinking strategists are aware of how they can transition India’s mining industry to be highly competitive within the greater global economy.

The macro-economic forces impacting our industry and our global economy cannot be ignored. Change is inevitable. It is under way. The pace of change will accelerate across the landscape of India’s coal and other mining sectors.

COAL INSIGHTS 45 January 2012

CORPORATE

Essar to set up coal fines briquetting plant Coal Insights Bureau

E

ssar Steel India Ltd, India’s leading flat steel producer, has planned to set up a coal fines briquetting plant within the next few years. The company, which has recently set up two modules – each of 0.87 million tons per annum (mtpa) – Corex technology steel units, expects the proposed unit to significantly reduce its total requirement of Corex coal for its plant.

“We are in talks with a Korean company to set up a coal fines briquetting plant and it will happen soon. Once that happens, then all the fines that we are generating now will be briquetted and charged back in the Corex; so the net requirement of Corex coal will almost come down to half,” Essar Steel’s chief (Hazira Complex) Rajiv Bhatnagar, told Coal Insights.

“Right now we are using around 6,000 tons per day or about 2 mtpa of Corex coal as we are operating at around 70 percent capacity utilisation. But once we start operating at full Essar Oil’s gas reserves at Raniganj Category

Gas reserves gross, in millions of cubic feet (MMCF)

Total proved (1P)

22,387.8

Probable

90,737.8

Possible

143,580.8

Unrisked contingent resources Category

Gas resources gross, in millions of cubic feet (MMCF)

Low estimate (1C)

160,604.3

Best estimate (2C)

444,704.3

High estimate (3C)

826,343.3

Prospective resources Category

Gas resources gross, in millions of cubic feet (MMCF)

Low estimate

114,973.7

Best estimate

296,870.4

High estimate

562,744.2

Source: Essar Oil Limited

capacity, the total requirement of coal should ideally go up to a high of over 2.4 mtpa,” Bhatnagar informed. “However, with the setting up of the briquetting plant, our Corex coal consumption, instead of going up to 2.4 mt, will come down to around 1.4 mt,” he added.

Essar’s Corex modules started working from September 2011 and December 2011 respectively and are currently operating at around 50 hits per day, which will go up to 70 hits per day on attaining full capacity. Right now, the company is buying Corex coal directly from two Australian miners and one South African miner, Bhatnagar added.

Raniganj gas reserves Meanwhile, Essar Oil Limited, an Essar group company, has reported a significant increase in its (independently verified) proven and probable reserves and best estimate 2C contingent gas resources at its Raniganj coal bed methane (CBM) exploration block in West Bengal.

According to a company statement, the total proven and probable reserves (2P) at Raniganj, evaluated on September 1, 2011 are 113 billion cubic feet (bcf) gross, or 18.8 million barrels of oil equivalent (mmboe). The best estimate contingent resources (2C) are 445 bcf gross, or 74.1 mmboe, according to evaluations carried out by international consultants Netherland, Sewell & Associates, Inc. (NSAI).

The latest evaluation also shows that there are also 297 bcf gross, or 49 mmboe of best estimate prospective resources of gas at Raniganj.

“This revised evaluation of gas resources at Raniganj underlines the potential of this block. Gas is in short supply in India but will be an increasingly important fuel and we are well placed to capitalise on that,” said Naresh Nayyar, Deputy Chairman-Essar Oil and CEO-Essar Energy. The Raniganj block covers 500 sq km area and has a current production of 22,000 standard cubic metres of gas per day. Progress towards full commercial production is on and peak production is expected to reach 3.5 million scm/day, the statement said.

COAL INSIGHTS 46 January 2012

CORPORATE

BKT aims to cull 10% share in global off-highway tyre market Arindam Bandyopadhyay

Arvind Poddar, Vice Chairman & MD, Balkrishna Industries Limited

A

‘Growing together’ is the tagline BKT is identified with. But when it comes to off-highway tyres, the Group is striving to leave everyone behind. Come 2014 and BKT may emerge as a global leader, garnering 10 percent share in the global off-highway tyre market. This, according to managing director Arvind Poddar, will be helped by India’s largest and most modern off-highway tyre plant that BKT is setting up at Bhuj in Gujarat.

t a time when the Indian miners lament the dearth of local-made heavy mining machineries, Mumbaibased BKT is rolling out an ambitious plan to emerge as a global leader in the off-highway tyre segment. BKT is part of the well-diversified Indian conglomerate Siyaram-Poddar Group having presence in textiles, garments, chemicals, paper and tyres with sales in excess of $800 million.

Founded by Dharaprasad Poddar, the current group chairman, and late Mahabirprasad Poddar, the founder chairman, the group began its operations as textile trading house, in 1951 and grew steadily by diversifying into other business sectors.

The group ventured into tyres in the year 1988 by setting up Balkrishna Tyres (BKT), manufacturing two-three wheeler tyres. However, the real success story of BKT began in 1995, when it ventured into production of off-highway tyres. With complete focus on intensive market research, in-depth product knowledge and excellent product development capabilities, BKT has already made its mark in the off-highway tyres segment and is continuously evolving to achieve a greater footprint in this niche segment.

Today, the tyre segment contributes more than half of overall Group turnover, with a global sales of `2,200 crore (around $415 million). The segmental revenue is expected to grow up to `2,800 crore in 2011-12 (around $528 million). By 2014, BKT aims to increase the global tyre business turnover to $1 billion.

“Our mid-term goal is to emerge as a global leader in offhighway tyre solutions market. For this we need to garner 10 percent market share by 2014 (current share is around 3 percent). To achieve the same, we pledge to manufacture and maintain superior quality off-highway tyres, backed

by advanced technology and rigorous quality control for complete customer satisfaction,” said Poddar.

Plant expansion Currently, BKT has three state-of-the-art tyre manufacturing units located in northern and western provinces of India. Two of these units are set up in Rajasthan and the remaining in Maharashtra. A fourth tyre manufacturing plant is coming up at Bhuj in the western state of Gujarat, very near to seaport Mundra.

Bhuj plant to reach peak production by FY15

BKT’s new tyre plant, coming up at Bhuj in Gujarat, is expected to reach peak production by FY15 and nearly double the company’s manufacturing capacity for offhighway tyres, a senior official said.

The plant, claimed to be the largest and most sophisticated off-highway tyre plant in India, would commence production in phases. “In the first phase, the tube plant has started production. The second phase will come on stream within 7-8 months from now and the third phase in another 3-4 months from thereon. By 201415, the plant is expected to reach peak production stage,” the official said.

Besides meeting the domestic demand, the new plant will cater to Europe through the Mundra port, which is well connected with the ports in Europe, he added.

COAL INSIGHTS 47 January 2012

CORPORATE

BKT tyre plant in Rajasthan

All plants put together, produce a vast range of around 1,900 SKUS (Stock Keeping Units), thus making BKT as one of the most coveted brand, offering one-stop-shop to the distributing channel as well as the discerning end-users.

The machines are modern, efficiently producing tyres as per international standards and satisfying the varied needs of the consumers. From efficient compound mixing machines to the best in class curing presses, to the high cost and renowned tyre building machines, BKT plants are fully equipped with the most modern machinery and are very well maintained to get the optimum output in terms of quality and quantity.

Effectively handling multiple mould changes and managing more than 40 compounds everyday, BKT blends charisma into the tyres, thus serving the diverse needs at a time.

Consistency in tyre quality is the result of more than 450 checks, which every tyre in the manufacturing process goes through and thus making BKT tyres, one of the most reliable ones in terms of lowest claim ratio in the industry.

With the enormous demand which BKT tyres enjoy, capacity enhancement is a regular agenda with the production team, and thus results into higher output with the passage of

BKT’s R&D capabilities • R esources and infrastructure • Dedicated team of engineers for R&D • Dedicated team of engineers for Technical support & Quality Control • Complete testing equipment for compound development • 3D Modeling & EDM Process for tyres and moulds • Controlled Laboratory tests • Highly efficient product testing machines • Tie-ups for outdoor testing facilities

each quarter. The fourth plant at Bhuj shall practically double the capacity and thus would be greatly facilitate in reducing the tyre lead times. The new plant would be a greenfield project, with ultramodern facilities having advanced technology equipments. This plant would be having vast tract of land available for future expansion, which would not be a constraint.

The collective zeal of the various teams including the manufacturing, R&D, Quality control, etc. formulates “Team BKT”, into a unique group of result-oriented squad, which can’t allow any tyre going flawed in the entire process.

Mould plant BKT’s mould plant near sub-urban Mumbai in western India offers great flexibility in having faster turnaround times – from the concept to tyre availability in the market. The best-in-class machinery and the 3-D modeling systems offer greater control on the mould/tyre dimensions and thus the plant acts as an added advantage.

Markets & exports A testimony to BKT’s consistency in offering high-quality specialty tyres is amply demonstrated by the fact that 95 percent of its products are consumed by the demanding overseas markets, of which over 50 percent is sold in technologically advanced Europe. Other major markets for BKT are North America and the Middle East, followed by South America, Africa, Australia and Asia. With its total dedication to the speciality tyre segment, BKT has also emerged globally as the preferred supplier to major OEM’s in construction, agricultural and industrial tyre segments. BKT has established offices in Italy and the US (Ohio Akron) to look after the overseas operations.

“Today, BKT has presence in more than 120 countries across the globe and has the privilege of being the largest tyre exporter out of India,” said Poddar.

COAL INSIGHTS 48 January 2012

CORPORATE

Apart from catering to the Indian OEMs, BKT has been a preferred supplier on a global basis to leading OEMs in the agricultural and industrial/construction equipment sectors.

In India, the company is present in the OTR segment, mining, infrastructure, material handling and OEMs. However, the agri tyre segment is not in its current focus in India.

Quality control process Quality control is stringently carried out at every stage of manufacturing – starting from the raw material to the finished product ensuring a product of a consistently high quality. Stateof-the-art manufacturing tools run by experienced operators

allow BKT to manufacture tires of outstanding quality efficiently and cost-effectively. All BKT plants are ISO 9000 and IS0 14000 certified and that reflects in the plant efficiency.

In order to ensure high standard of quality, BKT has set up a sophisticated test centre with modern equipment, including those that are used for endurance-testing. Besides in-house testing, BKT regularly conducts tests under international regulations outside India as well which reinforces the confidence the R&D team puts into each product. BKT runs on SAP and all the processes are integrated by this world renowned IT infrastructure, thus giving the cutting edge which is essential in today’s scenario.

BKT’s unique off-highway tyres include: • • • • • • • • • • • • • • •

Agricultural tyres (Cross ply & Radial) Industrial and Construction tyres (Cross ply & Radial) OTR Tyres (Cross ply & Radial) Other special application tyres : Turf tyres, ATV Golf Go Cart tyres Military tyres (puncture resistant and run flat) The major highlight of BKT’s product range is the width and depth of its product range, showing the magnitude as well as diversity: Small go-kart tyres to gigantic earthmover tyres.

Tyres for rim size from smallest 5” up to largest 54”.

Tyres weighing from 1.7 kg to 1700 kg.

Conventional cross ply tyres to most modern polyester radials, all steel OTR radial, aramide belted (puncture proof) and run flat military application tyres.

Tyres for varied applications from conventional

• • • • • •

farming to modern and high technology oriented agriculture. From effortless implements to complex GPRS controlled tractors.

T ractor tyres specially designed to carry higher loads at a higher speed on roads and with minimal soil compaction in field.

M ega sizes radial tyres for tractors having over 250 HP engine capabilities.

S cientifically designed and engineered tyres for tankers and wagons.

T yres for construction, material handling, port applications, mining (underground as well as open cast mines).

T yre for golf carts used at golf courses and passenger transport at airports.

T yres for ATV/Quads - from utility to high performance racing tyres. Also available, E-marked ATV tyres for usage on European roads.

COAL INSIGHTS 49 January 2012

CORPORATE R&D and technology BKT’s R&D team is one of the best in the industry with vast experience in respective areas. The team is credited for developing successful solutions to a variety of customer needs, right from small turf tyres to large OTR tyres consistently.

BKT’s R&D centre, set up in plant locations, is very modern, capable of developing various types of rubber compounds required for manufacturing tyres for varied applications. Many different types of compounds are available at BKT, acting as genesis for varied applications, to which BKT tyres cater.

BKT is also associated with European testing facilities to ensure its products perform to demanding stringent applications.

Eco-friendly approach BKT has consistently made efforts to reduce its carbon footprint and uphold its strongest belief – “Environment protection at all costs”. The company is committed to social causes as well as to protecting the environment. A large part of BKT’s energy requirement is fulfilled through non-conventional and renewable energy sources, where BKT has invested rationally.

The World Environment Day is celebrated every year at all plants with various programmes such as tree planting and plant distribution within the factory premises. However, commitment towards environmental protection is an ongoing agenda and is religiously followed at each plant.

BKT strongly believes in “Green World” cause and ensures environment friendly steps at all plants. ♦♦ All the three plants’ outputs are in compliance with European Directive “REACH”, as of November 2009. ♦♦ ‘Green Power’ is generated through the windmill established by BKT in the northern state of Rajasthan. ♦♦ Energy conservation is on the top of the agenda, with a belief that “power saved is power generated”.

Unique product range & SKUs BKT has been continuously expanding its production base and it has today the most comprehensive product range with more than 1900 SKU’s (Stock Keeping Units) and can easily be categorized as “One Stop Shop” for “off-highway tyre” solutions. Apart from tyres for replacement market, today, BKT caters to all major Original Equipment (OE) customers

for their requirement of off-highway tyres, globally.

New product development & branding According to Poddar, BKT has always been in the forefront to adopt new generation technologies in tyre manufacturing as well as on the raw material front. It has been proactive in tandem with its equipment suppliers to modify the equipment, making them bestsuited for production. Equipment is selected from the best available source.

Similarly all the raw materials at BKT are sourced from top quality suppliers with whom BKT has enjoyed an excellent relationship for many years. This ensures a continuous supply with consistent quality.

Milestones @ BKT Year 2007 2008

2009

2010 2011

Achievement Agrimaxforce – If technology tyres introduced l Introduced All Steel Radial OTR tyres (EARTHMAX) l North America office established l 5 new radial product families added: r Harvesting tyres r MegaTractor tyres r Transport tyres r Forestry tyres r MPT Tyres l National Energy Conservation Awards by Govt. of India. l Bullet proof tyres introduced for military application l Successful launch of new BKT Logo with “Growing Together” as the new mantra l

With regard to new product development, BKT develops 150-160 new SKUs every year. This continuous development is the basis for the vast product range available from BKT, and offers a wide range to choose from.

“Another unique feature of BKT’s product range is variety,” said Poddar. “BKT has tyres available from the smallest 5” GoKart tyres to the largest 51” Mining tyres and thus catering to the diversified market segments,” he said.

As for branding the products, consistent efforts over the years have helped create a strong awareness of BKT. Today BKT has emerged as a symbol of trust and excellence as shown in its prior tag line: “Confidence Reinforced!”

“Growing together is our new tagline, strengthening the new corporate identity at every stage. BKT is firmly committed to this aim of being perceived as a company where people and machines share a strong professional fellowship,” Poddar said.

Regular participation in trade fairs brings BKT closer to its consumers and promotes awareness of the product innovations developed regularly by BKT. With the mother brand firmly entrenched in a position of strength, BKT is building strong sub-brands to offer customised products to specific niche categories.

COAL INSIGHTS 50 January 2012

CORPORATE

A

fter playing second fiddle to various state-owned power generation companies, the Emta Group has decided to take the plunge into coal-based thermal power generation. The Kolkatabased private miner, which has joint ventures (JVs) with the utilities to develop captive coal blocks, has formed a wholly owned subsidiary Emta Power Ltd (EPL). The Group is now looking to set up its own generation plants under EPL around the areas where it is operating, company sources told Coal Insights.

“As a plan towards forward integration, an ambitious plan has been drawn up towards setting up thermal power generation units.

This will be our own venture, unlike the JV we have with some other utility,” a senior official said.

To start with, the company has planned to set up a super critical thermal power project near the Pachwara (Central) coal block in Jharkhand, the Group’s largest producing block until now. The move is aimed to further enhance the production capacity of Pachwara (Central) coal mine by 6 million tons per annum (mtpa) from its current level of around 8.5 mtpa.

The sources said that the clearance from the state

Name of the block

Operated by

Operational since

Tara (East & West)

JV with WBPDCL and DPL

1997

47.50

4.00

Barjore

JV with WBPDCL and DPL

2009

12.15

1.50

Pachwara (Central) JV with PSPCL

2005

289.00

8.50

government has been obtained. The project is currently under planning stage and is likely to kick off shortly. However, the exact location and the capacity are yet to be decided.

Along with this, the company has also planned to set up a generation unit to be run by “washery rejects” at Pachwara (Central). “The idea is to set up a coal washery at the pithead of Pachwara (Central) to wash the coal of inferior quality.

The washery rejects will be utilised as fuel for the proposed thermal power plant. While no firm deadline has been set for this project, it is expected to come up within a period of 24 to 30 months.

The Pachwara (Central) mine, which was developed under a JV with Punjab State Power Corporation Ltd (PSPCL), started operation in 2005 and has produced around 29 mt of coal to date. The mine having total mineable reserve of 289 mt has an average stripping ratio of 4.72 cu.m/te and produces 8.5 mtpa of coal supplied to PSPCL power plants. The proposed washery project would help to “avoid transportation of ash for a distance of more than 1,500 kms vis-à-vis delivery of stipulated quality of coal to the thermal power plants of PSPCL,” the sources said.

Baranj I-IV

JV with KPCL

2008

2.50

Raniganj project

Barjore (North)

JV with DVC

2011

61.10

3.00

Khagra-Joydev

JV with DVC

2011

103.80

3.00

Emta Group already has a JV in power generation with the Himachal Pradesh government. The JV named Himachal Emta Power Ltd (HEPL) is coming up with a pithead coalbased thermal power project at Raniganj in West Bengal.

However, due to problems in getting adequate coal feed from Gorandi ABC block, the generation capacity of the

Blocks under operation

Total

Source: Emta Group

Total mineable reserve (mt)

Peak production capacity (mt)

22.50

COAL INSIGHTS 51 January 2012

CORPORATE Raniganj plant has been pruned to 250 MW from the initially planned 500 MW. “The problem is that the Gorandi block has been allocated jointly to us and JSW. From our share of the production, we estimate, there won’t be sufficient quantity of coal available to run a 500 MW plant for 20-25 years. So we decided to start with 250 MW capacity instead,” the sources pointed out.

The Gorandi block is slated to come on stream by FY13 and would have an annual production of around 2.5 mtpa. In sync with the progress in the block’s operation, the Raniganj plant is likely to start generation by the middle of 2014.

The JV has meanwhile acquired some land and obtained water clearance for the project. It has also placed the order for plant equipment, sources said.

Blocks under development Name of the block

Operated by

Pachwara (North)

JV with WBPDCL Under execution and DPL

Badam

JV with TVNL

Gondulpara Gorandi ABC

Meanwhile, in coal mining, the Emta Group is eyeing a total production of around 50 mtpa by 2015 from its existing and upcoming projects, the sources said. These projections were scaled down a little last year, mainly due to delay in clearances, but have since been revised in view of the overall progress and strong demand from the power sector.

“Overall we are now aiming to achieve a production of 50 mtpa by 2015. Nearly half of this will come from the blocks currently under operation and the remaining half from the projects in the pipeline,” they said.

Production at Pachwara (N)

by May-June Coal Insights Bureau Emta Group expects to start production at its Pachwara (North) block in Jharkhand by May-June this year, according to company sources.

“We expect to get the mining lease any day now.

Accordingly, mining activity may start as early as next month. Production is likely to begin three months thereon,” the sources said.

Earlier, the company was expecting production to start by March 2012, but a slight delay in getting the mining lease has postponed the schedule.

Pachwara (North) block has a mineable reserve of around 393 million tons and holds a peak production capacity of 15 mtpa. Coal produced from the block would be supplied to its JV partner WBPDCL. Production during the first year would be 3 mt, and it will take 4-5 years to ramp up production to the peak level of 15 mt.

At peak production, this would be the largest producing block for the company and would double the total annual production from the current level of 15 mt.

Peak Total production mineable reserve (mt) capacity (mt) 393.00

15.00

Under execution

90.50

3.00

JV with TVNL

Under execution

116.68

4.00

HEPL

Under execution

2.50

Under execution

1.00

GnagaramchakBengal Emta BHadulia Total

Production

Operational since

25.50

Source: Emta Group

Emta Group produced around 14 mtpa of coal in FY11 and is expected to report a marginal rise to 15 mtpa in FY12.

Production would rise significantly in the coming years as a number of blocks, currently under development, are scheduled to come on-stream.

Also, the blocks which have just come to the production stage would achieve peak production by then, the sources said.

Among the projects under execution, Khagra Joydev, developed by DVC Emta (a JV with DVC), started production in the current fiscal and is likely to add to the production reported last year.

Around four projects – Gangaramchak Bhadulia, Pachwara (North), Gorandi and Badam – are expected to come to production next year (FY13). Together, these four blocks would add a peak production of more than 21 mt. Of this, 15 mt would come from Pachwara (North) alone, the largest of the blocks in terms of mineable reserves and estimated production capacity.

Forward integration With the mining ventures showing steady progress, the group is looking for diversification and forward integration of its businesses. It is looking to add power generation to its portfolio and also trying to gain handsome returns from its paper business in West Bengal. Overall, the group is aiming for an ambitious topline of around $1 billion, the sources said.

“Keeping in tune with the forward integration of the group, the company’s ventures into thermal power generation, manufacture of industrial packaging paper shall add to the topline,” they said.

For instance, the Ranigunj power project is expected to add `500 crore to group turnover. Likewise, the company’s own power generation business would bring significant revenue. The sources, however, refused to put any date to the accomplishment.

COAL INSIGHTS 52 January 2012

CORPORATE

JSW to start coal mining for Bengal project Coal Insights Bureau

J

SW Steel Ltd has planned to start coal mining for its Salboni project in West Bengal in near future.

The company, still unsure about the timeline of the project, has already started enabling work and invested `600 crore, chairman Sajjan Jindal told West Bengal Chief Minister Mamata Banerjee during a recent meeting.

Sajjan Jindal, Chairman, JSW will invest an additional JSW `2,000 crore for coal mining, he said, adding that the work would start shortly. JSW Bengal has got three coal blocks through the state dispensation route - Kulti, Ichapur and Sitarampur in Ranniganj belt. The combined estimated reserve is over 600 million tons (mt), sources said.

This project also ran into a land hurdle but it was resolved through the chief minister’s intervention.

JSW, in the meantime, requested Banerjee to move the Centre to solve the “iron ore crisis” that has held up the proposed `20,000 crore steel project at Salboni.

Jindal had indicated that the project would be delayed due to shortage of iron ore but the company would start the work for mining and other processes. The financial closure of the steel project too would not be possible without iron ore linkage, he said.

According to company officials, there should be some sort of clause in the iron ore policy so that the state without iron ore reserve can have big steel industry.

Sources said that Banerjee has already instructed WBIDC managing director Nandini Chakraborty to write a letter to

the Centre in this regard. JSW officials had earlier informally requested the state to help procure iron ore from the National Mineral Development Corporation’s (NMDC’s) mines in Orissa and Jharkhand.

JSW Steel’s project has been delayed by more than three years. While JSW Steel has been allotted coking and noncoking coal mines in West Bengal, the state has no iron ore mines.

The steel major had planned to enter into contract with private miners for iron ore fines, but with the Orissa government coming down heavily on miners, the strategy does not seem to be working. Moreover, the clampdown in Karnataka has put the Bellary iron ore out of bounds as well.

With Banerjee’s help, JSW would be in a position to enter into long-term contracts with mining PSUs. JSW Steel’s Salboni project had run into several hurdles in the last six months. The new state government has vested the land directly purchased by JSW Steel with it, since it believed that the company had violated rules under the Land Reforms Act, for not seeking prior exemption under 14Y. The Land Reforms Act of 1955 places a ceiling of 25 acres on land acquisition while Section 14Y exempts the ceiling in four cases: mill, factory, workshop and tea gardens.

JSW Steel, which entered into a development agreement with the West Bengal government in 2007, did not have a lease deed till recently. The company got permissible possession of the land from the erstwhile government.

However, the company signed a lease agreement for 3,800 acres, which was under the land reforms department. WBIDC is seeking a timeline from the company for the project.

COAL INSIGHTS 53 January 2012

Expert Speak

GCV-based pricing: Some apprehensions J.P. Panda

G

rading of coal was conceived in India in the year 1917. It was, however, in the year 1944 that a systematic grading of coal was started after promulgation of the colliery control order. Ash content of low moisture coal and the ash plus moisture content of high moisture coals remains the basis of the present system of grading of non-

coking coals.

It was in the year 1962 that a committee was set up by the government, which recommended a grading system based on gross calorific value as the parameter. This, however, was not implemented.

In the same year, the government again constituted a study group to examine whether the ash plus moisture or the heat value would be a better measure for coal grading. The study group while considering the suitability of gross calorific value also viewed with concern the heat losses arising out of high ash content and evolved a concept of Useful Heat Value (UHV). The UHV was obtained by subtracting ‘ash penalty’ from gross calorific value. The gross calorific value (GCV) was obtained by using Central Fuel Research I nstitute (CFRI) formulae, namely; For low moisture coal: 1.8Q = 165F + 136 ( V- 0.1A ) – 108 M; and For high moisture coal: 1.8Q = 154 [100 – ( 1.1A + M ) ]-108M; where, Q = Heat value Kilo Calories per Kilogram; F = Fixed carbon%; V = Volatile Matter%; A = Ash%; M = Equilibrated Moisture % at 60% relative humidity and temperature 40 degrees Centigrade for high moisture coal and “ analysed basis” for low moisture coal.

This system of UHV was approved by the erstwhile tariff commission, Government of India in the year 1966-67 but was adopted only in the year1975 for grading and pricing.

In the year 1976, CFRI put forward a formula for UHV, which avoided the need to calculate GCV by an empirical formula by deducting Ash + Moisture penalty.

UHV (K Cal/Kg) = 8900 - 138 (A+M), where A & M represent the equilibrated ash and moisture percentage of coal.

This formula was applicable to high moisture coal only.

However a modified formula was given by CFRI for low moisture and low volatile coal which is as follows: UHV (K Cal/Kg) = 8900 – 138(A+M) – 150(19 – VM) where A, M, VM are percentages of ash, moisture and volatile matter respectively.

Based on the above two UHV formulae adopted by the government, Grades A to G were specified in the UHV span of 6200 to 1300 Kilo Cal/Kg. Currently the UHV system is still in vogue in this country for both pricing and grading.

UHV introduction In the sixties most of the boilers of the thermal power houses were designed for low ash coal and were imported and, had fixed bed and moving grate stokers. Use of high ash Indian coal in these boilers resulted in loss of sensible heat in the ash as well as loss due to unburnt carbon lost along with the ash.

The other probable reason for introduction of UHV concept was probably the incentive provided to the consumers using high ash coal and low cost of oil at that time.

Drawbacks In the UHV concept, the variation in each grade slab is between 600 to 1100 K Cal/Kg. For example the variation between upper and lower limit of grade B is 600 K cal/Kg and it increases to 1100 K cal/Kg between the upper and lower limit of grade G. Most of the grade declarations conform to the lower limit only, and if by chance at some places it conforms to the higher limit, there is a tendency on the part of the producer to blend it with lower grades to bring it to the lower limit.

Therefore by and large there is dissatisfaction amongst the coal consumers.

These wide variations between the upper and lower limits in a particular grade does not provide any incentive to the producer to improve the quality by any means of coal beneficiation methods as the grade does not improve.

The UHV currently in use is a notional formula arrived from the statistical average of coal samples in the sixties and at present does not represent the actual utilisation of heat in the coal. It is not an accepted global concept. All over the world coal is transacted only in GCV.The ash penalty benefits to consumer were relevant to the combustion technologies in use in the 60’s. With the improvement in the boiler efficiency now with newly designed boilers capable of burning high ash coal efficiently, the ash penalty bonus is no longer relevant as compared to the earlier decades.

Low moisture coals having less than 35 percent ash are mature and high ranking coals but due to the penalty for low volatile content in the UHV concept, its heat value is reduced considerably against the more realistic value of the GCV. This results in loss to the producers of low ash and low volatile coal even though the heat value is much more.The present combustion technology of the boilers for utilising high ash coal with high efficiency has no place to still rely on the UHV which included an ash penalty for loss of sensible heat in the ash and poor combustion of o the older type boilers.

COAL INSIGHTS 54 January 2012

Expert Speak India is not the only country using high ash coal for thermal power generation, and as a matter of fact all modern boilers are designed on the GCV of the coal it will consume and not on the UHV. In terms of current formula of the UHV concept, coal having more than 65.5 percent ash plus moisture does not have any useful heat value, which is not true and the formula itself has outlived its utility as even these coals can be burnt efficiently in fluidised bed combustion process to generate power. Even pulverised fuel firing system eliminates heat losses compared to the old stoker fired boilers, thus UHV grading has become irrelevant.

GCV and non-coking coal These wide variations between the upper and lower limits in a particular grade does not provide any incentive to the producer to improve the quality by any means of coal beneficiation methods as the grade does not improve.

Internationally all coals are classified and marketed on GCV basis and UHV is not followed anywhere in the world.

GCV is not dependent on the technology of the use of the coal but is the inherent heat value of the coal.

GCV is determined in the laboratory from the heat released by the combustibles in coal whereas UHV is computed by applying ash penalty on the heat value of the combustible matter by applying an empirical formula that has lost its utility long ago. All the power houses even today are analysing the GCV to calculate their thermal efficiency.

Past efforts The Damodar Pande Committee, in the year 1987, recommended a changeover from UHV to GCV with a difference of 200 K Cal/Kg for each grade.BICP in the year 1991 also recommended change over to GCV system after consultation with the experts and several consumer organisations Coal Controller led technical group in the year 1992, formed by ministry of coal also recommended changeover to GCV system in the year 1993.

The Ministry of Coal again constituted a group of experts along with some of the major consumers in the year 1997 to examine and report to the ministry about the changeover.

They also recommended changing over to the GCV system.

While the Planning Commission and ministries of finance and industry supported the proposal, both the ministries of power and steel raised a number of objections. It was decided in March 1999 that status quo be maintained. Subsequently colliery control order, 2000 has came into force from January 1, 2000, deregulating coal price and distribution, the proposal was once again processed for approval of ministry for having gradation on the basis of GCV without any change in the existing royalty structure.

As desired by the secretary coal, a new committee was to look into some of the contentious issues related to the proposal, which are as follows: ♦♦ Whether the number of new grades can be reduced from 21 to about 12 or so to contain quality disputes. Preparations required for establishing proper sampling arrangements.

♦♦ Whether grading is at all necessary if legally enforceable FSA is entered into and royalty is charged ad valorem.

On November 18, 2000, yet another committee was formed which consisted of Kalyan Sen, director CFRI, N.K.Sharma D(T) Coal India and P.K. Kukde, D(T), MSEB The committee was formed to switch over to the GCV system. The committee also had to consider the following: ♦♦ The number of grades to reduce from 21 to around 12 or so; the band width of 200 K Cal/Kg is to be increased 250/300 K Cal/Kg. The advantages to the producer and the consumers after reduction of the number of grades. ♦♦ Measurement of GCV is done by manual or electronic bomb calorimeter. Both the producers and consumers will require time to provide the facility and it will require interaction with the consumers. ♦♦ The joint sampling and third party sampling has to be continued. Also, with the introduction of legally enforceable FSA with major coal consumers of coal which may be mainly on the basis of parameters like ash, moisture, volatile matter and GCV may not have much relevance.

However royalty has to be paid on ad-valorem basis.

The committee has to consider all these issues before arriving at a decision to change over. The committee suggested 21 grades for conversion from UHV to GCV. However, the recent committee by Coal India reduced the earlier suggested 21 grades to 17 grades which was finally accepted by the coal ministry and implemented.

Objections of coal consumers The consumers see a hidden agenda behind the move, as they fear they have to pay more price than what they are paying at present. They apprehend that in the name of GCV grades, below G or non graded coals will be supplied to the consumers.

Consumers are not ready to procure bomb calorimeters and extra manpower. They also feel that more grades mean more disputes. They do not see the necessity to change over to a GCV system with FSAs coming up.

GCV is not the only element in the boiler technology; it should also take into account the percentage of ash and moisture. The consumers have perceived of the changeover as a “wolf under the skin of a lamb.”

Coal India may gain in the changeover from UHV to GCV, but the gain may not be significant, some consumer associations feel. * Turn to Pg 62 for details of new GCV-based pricing of non-coking coal announcd by CIL w.e.f. January 1, 2012.

(The author is managing director of Priya Mining Consultancy and Services Ltd, which provides consultancy on both underground and opencast coal mines, including EMP-EIA, forest clearance etc. The company has also produced CDs on a wide variety of subjects including all DGMS circulars from 1957 till December 2010, a history of disasters in coal mines for the last 100 years and safety and productivity improvement in both opencast and underground mining. The author can be contacted at jppanda2003@yahoo.com.)

COAL INSIGHTS 55 January 2012

INTERNATIONAL

EIA scales down 2011 US coal production estimates Coal Insights Bureau

T

he Energy Information Administration (EIA) of the US has scaled down its estimate of coal production as well as that of consumption for the country in 2011.

The agency, which is an independent statistical organisation within the US Department of Energy, said in its January 2012 report that US coal consumption in 2011 is likely to be at 1,020.3 million short tons (million s.t), compared with its December forecast of 1,031.4 million s.t.

The country’s coal production is likely to stand at 1,083.5 million s.t. in 2011 which is lower than the December projection of 1,084.3 million s.t, it said.

Coal consumption for electricity generation fell by 30 million s.t. (MMst) (3.1 percent) in 2011. Electric power sector coal consumption is forecast to decline by an additional 2.1 percent in 2012 as generation from natural gas, nuclear and wind increases and electricity consumption remains flat. EIA expects the decline in electric power sector coal consumption to continue in 2013, although at a slower rate, as increases from other sources continue to displace coal-fired electricity generation.

The January report projects that coal consumption in the electric power sector in 2011 is estimated to be 944.9 million s.t, which is lower than the level projected in the previous month at 956.1 million s.t. For 2012, coal consumption in this sector has been projected to increase to 925.1 million s.t from 909.3 million s.t estimated in the previous month.

According to the January report, coal consumption by other sectors such as retail and industrial areas would be 51.9 US coal consumption (million short tons)

Source: EIA

US coal production (million short tons)

Source: EIA

million s.t and 48.9 million s.t, respectively. These are similar to the December projections.

Consumption by coke plants as well as for the residential and commercial sectors in this month’s report was forecasted at 23.5 million s.t and 3.0 million s.t, respectively, similar to the levels of 23.6 million s.t and 3.0 million s.t reported in December.

Electricity demand EIA now estimates that total consumption of electricity across all sectors during 2011 is likely to be 10.62 billion kWh per day, which is similar to last month’s projection for the current year (10.67 billion kWh per day). Again, projections for total consumption of electricity across all sectors in 2012 in the January report was 10.66 billion kWh per day, similar to levels projected in the December report at 10.61 billion kWh per day.

The latest report forecasted the total retail sector sale of electricity to be at 10.25 billion kWh per day, similar to the sale forecasted in its last month’s report, at 10.31 billion kWh per day. The January report estimated sale of electricity for residential sector at 3.92 billion kWh per day in 2011, which is also similar to that projected in its December report at 3.96 billion kWh per day.

Retail sale of electricity to the industrial sector is estimated at 2.67 million kWh per day in 2011, similar to levels projected in the December report.

EIA expects total US consumption of electricity will rise slightly during 2012 and then grow by 1.6 percent during

COAL INSIGHTS 56 January 2012

INTERNATIONAL 2013. Electricity sales to the residential sector were pushed down by 0.5 percent this year with less electricity consumed for air conditioning.

An increase in the growth rate in the number of households would drive a 2.1 percent increase in residential electricity consumption during 2013. Increasing growth in economic activity over the next two years should contribute to 0.8 percent growth in retail sales of electricity to the industrial sector during 2012 and 1.7 percent growth in 2013.

Oil consumption The latest report of the agency said that oil consumption globally is likely to grow to 88.11 million bbl/d, which is slightly lower than the forecast of 88.13 million bbl/d made in its previous report.

World oil consumption grew by an estimated 1.0 million bbl/d in 2011 and EIA expects that this growth will accelerate over the next two years by 1.3 million barrels per day (bbl/d) in 2012 and 1.5 million bbl/d in 2013. EIA also expects the recent tightening of world oil markets to moderate in 2012 and resume growth in 2013.

OECD consumption fell by 420 thousand bbl/d in 2011 and is expected to decline again in 2012 as very modest demand growth in North America will be more than offset by demand

decline in Europe. EIA expects non-OECD consumption growth will slow slightly, from 1.5 million bbl/d in 2011 to 1.4 million bbl/d in 2012 and further to 1.3 million bbl/d in 2013.

The agency has marginally decreased its projections for oil consumption in 2012 to 89.38 million bbl/d from 89.52 million bbl/d projected last month.

Trade EIA’s January estimate suggests that US coal exports will be around 106.9 million s.t in 2011, compared with its December forecast of 106.2 million s.t. The agency estimated US coal exports in 2012 to be 97.6 million s.t, which is higher than 97 million s.t reported in its December report.

US coal exports of 107 million s.t in 2011 were the highest since 1991. EIA expects US coal exports will remain higher than recent levels but stay below the 2011 level, as supply from other major coal-exporting countries recovers from disruptions. Forecast US coal exports are at 98 million s.t in 2012 and 2013.

The latest report estimated 2011 coal imports by the US at 13.8 million s.t, almost similar to the previous month’s projection of 14 million s.t. Again, this month’s forecast of imports for 2012 is at 15.4 million s.t, which is lower than the December forecast of 18.5 million s.t.

COAL INSIGHTS 57 January 2012

INTERNATIONAL

South Africa’s 2011 coal export up 1.7% Coal Insights Bureau

S

outh Africa’s coal exports through Richards Bay Coal Terminal (RBCT) in 2011 rose by 1.75 percent to 64.64 million tons (mt) in 2011 compared with 63.53 mt in 2010, according to data made available to Coal Insights by one of the promoters of the port. Of the total exports in 2011, almost 25 percent went to India, around 32 percent to Atlantic countries and another 42 percent to Asian countries other than India.

Exports to Asia during 2011 increased, by almost 7 percent to 43.11 mt from 40.47 mt in 2010 largely due to a surge in import by China. China’s imports of the same nearly doubled to 13.21 mt from 7 mt in 2010. China’s share in South Africa’s total coal export increased to 20.43 percent in 2011 from a low of 11 percent in 2010, the data showed.

India’s coal imports from RBCT dropped by almost 23 percent to around 16.13 mt in 2011 from around 21 mt in the previous year. Also, India’s share fell in 2011 from last year when it accounted for 33 percent of total coal exports from South Africa.

Break-up of shipment of coal through RBCT in 2011 and 2010 (in tons): Region

ASIA

ASIA TOTAL

India’s coal imports from RBCT dropped by almost 23% to around 16.13 mt in 2011 from around 21 mt in the previous year. Also, India’s share fell in 2011 from last year when it accounted for 33% of total coal exports from South Africa.

ATLANTIC

India’s coal import from South Africa received the first setback in 2011 after rising continuously for the last three years beginning 2007. The lower import in 2011 was attributed to slightly higher prices prevailing during the year which prompted Indian companies to use Indonesian coal in even larger quantities. The country’s coal import from South Africa had also suffered because South African coal is largely used in India by the cement and sponge iron sectors and the growth in both the sectors was almost negligible in 2011.

Pakistan’s coal import from South Africa’s Richards Bay Coal Terminal (RBCT) in 2011 fell by 52.35 percent to 493,255 tons from 1,035,142 tons imported in 2010. On contrary, coal import by South Korea, another major importer for RBCT coal, rose by 55 percent to 3.63 mt from 2.34 mt in the previous year.

Taiwan recorded a 26 percent rise in import of coal from RBCT in 2011 to 3.61 mt from 2.86 mt in 2010. On the other hand, around 2.77 mt of coal was imported by Malaysia in 2011, a rise of 3 percent from 2.68 mt in the previous year.

Madagascar, which did not import any coal in 2010, procured around 82,499 tons of coal in 2011, while Yemen which imported around 197,956 tons of coal in 2010 did not import any coal in 2011.

RBCT exports to Atlantic countries dropped by 1 percent to 20.61 mt from 20.86 mt in the previous year. Italy was the largest

Country China Japan La Reunion Malaysia Mauritius Pakistan South Korea Taiwan UAE Madagascar Thailand Yemen India

ATLANTIC TOTAL OTHERS GRAND TOTAL

ARA Argentina Brazil Denmark France Greece Ireland Israel Italy Mexico Portugal Senegal Spain Togo Turkey UK Nigeria

2011 13,205,829 467,405 417,700 2,771,980 850,736 493,255 3,626,257 3,609,240 1,312,409 82,499 139,200 16,132,140 43,108,650 3,743,931 171,193 765,062 1,497,711 1,032,382 27,500 93,632 3,112,649 3,949,376 395,764 47,395 391,672 2,973,832 92,000 1,684,715 596,544 33,000 20,608,358 921,507 64,638,515

2010 7,001,539 298,702 559,356 2,681,117 624,139 1,035,142 2,336,165 2,859,595 1,517,824 361,752 197,956 20,999,761 40,473,048 4,525,559 234,996 796,587 1,035,963 999,163 82,427 2,798,972 3,103,052 1,544,105 324,465 414,426 3,231,121 145,447 962,325 660,456 20,859,064 2,193,250 63,525,362

importer in the Atlantic region during the period with 3.95 mt of coal imports as compared to 3.1 mt in the previous year.

Other major importers in the Atlantic region include ARA with 3.74 mt and Israel with 3.11 mt of coal imports from RBCT. However, ARA registered a fall in imports by almost 17 percent as compared to the previous year while Israel and Spain recorded an increase of 11 percent. Spain recorded a decrease in imports of RBCT’s coal by 8 percent to 2.97 mt in 2011. Denmark, Turkey and France were some of the other notable importers for this period while Nigeria and Greece which did not import any coal in 2010 brought in around 33,000 tons and 27,500 tons of coal from RBCT in 2011.

COAL INSIGHTS 58 January 2012

Logistics

Railways Apr-Dec commodity freight up 4.6% Coal Insights Bureau

T

he Indian Railways (IR) commodity-wise freight traffic during the first nine months (April-December) of 2011-12 increased by 4.68 percent to 704.81 million tons (mt) as compared to 673.31 mt carried during the corresponding period last year, according to the latest data released by IR. The Railways earnings from commodity freight increased by 4.59 percent to `49,209.21 crore during the first nine months (April-December) of 2011-12 over `4,789.41 crore during the corresponding period of 2010-11, the data showed.

The Net Tonne Kilo Metres (NTKM) went up from 444,515 million during April-December 2010 to 466,968 million during April-December 2011, showing an increase of 4.68 percent year-on-year.

In the month of December 2011, total earnings from

commodity-wise freight traffic was `6,102.45 crore, of which `2,548.54 crore came from transportation of 41.01 mt of coal.

This was followed by `543.64 crore earned from transportation of 8.94 mt of iron ore for exports, steel plants and for other domestic users.

An amount of `562.73 crore was generated from transportation of 9.37 mt of cement, `403.71 crore from 3.94 mt of foodgrains, `328.89 crore from 3.52 mt of petroleum oil & lubricant (POL), and `369.32 crore from 3.10 mt of pig iron & finished steel from steel plants and other points.

The data further showed that `484.77 crore was earned from transportation of 5.61 mt of fertilizers, `100.41 crore from 1.12 mt of raw material for steel plants except iron ore, `303.64 crore from 3.46 mt of container service and `456.80 crore from 6.74 mt of other goods.

Volume of freight and earnings by the Railways in December Quantity (in mt)

Commodity

Dec’10 Dec’11

Earning (`in crore) Dec’10

Dec’11

Coal i) for steel plants

3.92

ii) for washeries

0.1

iii) for thermal power houses

25.28

iv)for public use

7.59

v) Total

36.89

Raw material for steel plants except iron ore

3.98 0.12

152.93 0.93

169.15 1.12

27.15 1,471.94 1,766.91 9.76

435.57

611.36

41.01 2,061.37 2,548.54

1.12

1.12

86.05

100.41

i) from steel plants

2.1

2.39

244.17

306.4

ii) from other points

0.68

0.71

55.63

62.92

iii) Total

2.78

3.1

299.8

369.32

Pig iron and finished steel

Iron ore i) for export

2.09

0.38

Commodity

413.87

107.13

Quantity (in mt) Dec’10 Dec’11

Earning (`in crore) Dec’10

Dec’11

ii) for steel plants

4.02

5.18

119.44

iii) for other domestic users

4.51

3.38

254.51

230.2

iv) Total

10.62

8.94

787.82

543.64

Cement

7.97

9.37

448.73

562.73

3.6

3.94

359.69

403.71

Foodgrains

206.31

Fertilizers

4.72

5.61

381.91

484.77

Mineral Oil (POL)

3.38

3.52

292.17

328.89

Container Service i) Domestic containers ii) EXIM containers

0.8

0.79

81.02

78.68

2.17

2.67

174.81

224.96

iii) Total

2.97

3.46

255.83

303.64

Balance other goods

5.83

6.74

363.86

456.8

Total revenue earning traffic

Source: Indian Railways

For Classified Advertisements contact Sumit Jalan, +91 91633 48243 or sumit.jalan@mjunction.in

COAL INSIGHTS 59 January 2012

79.88

86.81 5,337.23 6,102.45

Logistics

Essar Shipping inducts first mini Capesize vessel Coal Insights Bureau

E

ssar Shipping Limited (ESL), part of the Essar Group, has taken the delivery of MV Kamlesh, a mini Capesize vessel, the company said in a statement.

MV Kamlesh, the newest addition to Essar Shipping’s growing fleet, is a bulk carrier (253 metre long, 43 metre wide) and has a cargo capacity of 105,000 DWT (deadweight tons).

Essar Shipping has a total capex of $1 billion out of which $600 million is earmarked for acquiring 12 vessels and approximately $450 million is for acquiring two jack up rigs, the statement said.

This is the first in a series of six vessels that ESL will be inducting into its fleet by mid 2012. These six modern stateof-the-art vessels built at STX Shipyard are specially designed shallow drafted vessels that will provide substantially higher cargo carrying capacity focused on draft conditions of Indian ports.

“Essar Shipping is in the process of enhancing fleet capacity through induction of six Mini Cape vessels and six Supramax dry bulk carriers….With the addition of this vessel, Essar Shipping continues to serve its customers efficiently with a fleet comprising VLCC (Very Large Crude Carrier) tankers, Capesize vessels, Supramaxes, mini bulk carriers and other lighterage & transshipment assets,” said A.R. Ramakrishnan, Managing Director of Essar Shipping Limited.

“The fleet capacity will rise significantly to 2.6 million DWT after completion of induction of all the 12 vessels. With its shallow draft and high cargo carrying capacity, ESL is confident that these uniquely designed Mini Capesize vessels will make trade to the Indian coast more economical and cost effective for clients in the power, steel and other core sectors,” he added.

Essar Shipping Limited, a part of the multinational conglomerate Essar Group is an integrated logistics solution provider with investments in logistics services, sea transportation and oilfield drilling services. It is one of the largest private sector shipping companies in India owning the largest fleet of Capesize vessels.

The company has a diversified fleet of 23 vessels, including VLCCs, Capesizes, Supramaxes, mini bulk carriers and tugs.

The company has placed orders for 12 new ships, which are expected to join the fleet over the next 24 months. A sizeable part of the capacity is deployed on long-term contracts and COAs, insulating the company from the volatility of spot markets.

Port traffic up 0.3% y-o-y in April-Dec Coal Insights Bureau

T

he 12 major Indian ports have handled 418.184 million tons (mt) of traffic during the AprilDecember period of the current financial year, 0.38 percent higher than 416.581 mt recorded during the corresponding period last year.

According to data released by the Indian Ports Association (IPA), the movement of thermal coal through the major ports was up 14.69 percent to 36.588 mt during April-December 2011, compared to 31.903 mt achieved during the same period last year. The volume of coking coal, however, grew marginally by 0.02 percent to 21.710 mt during the same period, the data showed.

Among the major ports, Paradip port had the distinction of handling the highest quantum of thermal coal of around 11.651 mt during the period. Visakhapatnam port, on the other hand, shipped the highest quantity of 5.476 mt of coking coal during the period.

Movement of coking coal through Paradip, Kolkata, Chennai and Kandla ports declined during the period when compared to the corresponding period last year.

Movement of iron ore through the major ports showed a significant drop of 19.44 percent during the period under review. The major ports together handled 47.818 mt of iron ore during the April-December period compared to 59.355 mt in the corresponding period last year.

Mormugao port handled the highest volume of 21.540 mt of iron ore during the April-December period of the current fiscal. This volume, however, was about 4.09 mt less than the iron ore traffic moved during the same period last fiscal. The port has shown a negative growth of 12.62 percent during the period.

Movement of container traffic both in terms of tonnage and TEUs showed an increase during the AprilDecember period. The major ports handled 89.877 mt, besides 5.842 million TEUs during the period under review compared to 83.462 mt of tonnage and 5.616 mt of TEUs respectively. Six major ports showed positive growth in traffic handling during the April-December period of the current fiscal, while the remaining six showed negative growth on a year-on-year basis.

In terms of growth, Ennore port topped the list with a record 42.69 percent increase in cargo throughput.

New Mangalore port’s growth was lowest at about 2.73 percent during the period. In terms of traffic volume, Kandla port clinched the top rank with a cargo volume of over 60.910 mt recorded for the period.

The Mormugao port registered the highest decline of 12.62 percent in traffic handling during the period.

COAL INSIGHTS 60 January 2012

Logistics Traffic handled at major ports (During April to December 2011* vis-a-vis April to December 2010) (*) Tentative Port

(In ‘000 tons) Traffic Period

P.O.L.

Fertilizer

Iron Ore

Coal

Raw

Fin.

Thermal

Container Tonnage

Coking

Other Cargo

Teus

Total

% var. against 2010-11

Kolkata Kolkata Dock System Haldia Dock Complex Total: Kolkata

Paradip

Visakhapatnam

Ennore

Chennai

Tuticorin

Cochin

New Mangalore

Mormugao

Mumbai

J.N.P.T.

Kandla

All Ports

TRF APRIL-DEC.’2011

526

375

14

8

-

8

5105

311

3356

9392

TRF APRIL-DEC.’2010

662

559

14

14

-

97

4638

278

3540

9524

TRF APRIL-DEC.’2011

6140

3401

146

211

1900

4166

1772

104

6691

24427

TRF APRIL-DEC.’2010

8200

3744

224

152

1426

4713

2006

109

5079

25544

TRF APRIL-DEC.’2011

6666

3776

160

219

1900

4174

6877

415

10047

33819

TRF APRIL-DEC.’2010

8862

4303

238

166

1426

4810

6644

387

8619

35068

TRF APRIL-DEC.’2011

10710

6259

193

3411

11651

4317

68

5

3891

40500

TRF APRIL-DEC.’2010

9024

10109

167

3179

10318

4579

51

3

3581

41008

TRF APRIL-DEC.’2011

14375

13275

2999

620

2517

5476

3001

168

10376

52639

TRF APRIL-DEC.’2010

14189

13448

3027

608

2576

6108

1738

101

8085

49779

TRF APRIL-DEC.’2011

360

-

-

-

8884

251

-

-

897

10392

TRF APRIL-DEC.’2010

413

401

-

-

6407

-

-

-

62

7283

TRF APRIL-DEC.’2011

9595

51

250

222

610

351

22682

1175

8179

41940

TRF APRIL-DEC.’2010

10383

2164

373

195

1000

453

21559

1117

9633

45760

TRF APRIL-DEC.’2011

638

33

954

606

4407

-

6839

357

7375

20852

TRF APRIL-DEC.’2010

519

44

1040

460

3838

-

5107

341

7249

18257

TRF APRIL-DEC.’2011

10180

-

116

238

16

-

3678

258

641

14869

TRF APRIL-DEC.’2010

8922

-

42

245

40

-

3309

245

684

13242

TRF APRIL-DEC.’2011

16647

2268

689

21

-

2598

495

35

1515

24233

TRF APRIL-DEC.’2010

16076

2775

671

4

-

2176

428

30

1459

23589

TRF APRIL-DEC.’2011

635

21540

93

-

317

4434

181

17

1137

28337

TRF APRIL-DEC.’2010

692

25625

193

10

1389

3274

136

13

1111

32430

TRF APRIL-DEC.’2011

23984

-

191

123

3134

-

432

45

12353

40217

TRF APRIL-DEC.’2010

24868

-

118

233

2675

-

498

56

12272

40664

TRF APRIL-DEC.’2011

4151

-

-

-

-

-

43567

3244

1758

49476

TRF APRIL-DEC.’2010

3765

-

-

9

-

-

42121

3207

2158

48053

TRF APRIL-DEC.’2011

34041

616

4224

549

3152

109

2057

123

16162

60910

TRF APRIL-DEC.’2010

36038

486

5049

493

2234

306

1871

116

14971

61448

TRF APRIL-DEC.’2011

131982

47818

9869

6009

36588

21710

89877

5842

74331

418184

TRF APRIL-DEC.’2010

133751

59355

10918

5602

31903

21706

83462

5616

69884

416581

-1.32

-19.44

-9.61

7.27

14.69

0.02

7.69

4.02

6.36

0.38

% Variation from previous year

Source: Indian Ports Association

COAL INSIGHTS 61 January 2012

-1.39

-4.37

-3.56

-1.24

5.75

42.69

-8.35

14.21

12.29

2.73

-12.62

-1.10

2.96

-0.88

0.38

aNNEXURE Impact of Coal India Price Revision-ECL (Raniganj) Regulated Sector Sl. No.

Earlier Grade

Revised Grade on GCV Band

Previous Price ECL (LF)

Revised Price for ECL

Kcal/Kg

(Rs./Tonne)

(Rs./Tonne)

Percentage Increase %

1.

A

Above 7000

4100

5194

27%

2.

A

6700 to 7000

4100

4971

21%

3.

A

6400 to 6700

4100

4728

15%

4.

B

6100 to 6400

3990

4378

10%

5.

C

5800 to 6100

1820

4229

132%

6.

C

5500 to 5800

1820

3116

71%

7.

D

5200 to 5500

1560

2184

40%

8.

E

4900 to 5200

980

2003

104%

9.

E

4600 to 4900

980

1781

82%

10.

E

4300 to 4600

980

1028

5%

11.

F

4000 to 4300

730

933

28%

Impact of Coal India Price Revision-ECL (Raniganj) Non-Regulated Sector Sl. No.

Earlier Grade

Revised Grade on GCV Band

Previous Price ECL (LF)

Revised Price for ECL

Kcal/Kg

(Rs./Tonne)

(Rs./Tonne)

Percentage Increase %

1.

A

Above 7000

4100

5194

27%

2.

A

6700 to 7000

4100

4971

21%

3.

A

6400 to 6700

4100

4728

15%

4.

B

6100 to 6400

3990

4378

10%

5.

C

5800 to 6100

2370

4229

78%

6.

C

5500 to 5800

2370

3636

53%

7.

D

5200 to 5500

2030

2915

44%

8.

E

4900 to 5200

1270

2671

110%

9.

E

4600 to 4900

1270

2364

86%

10.

E

4300 to 4600

1270

1548

22%

11.

F

4000 to 4300

950

1399

47%

Impact of Coal India Price Revision-SECL (Regulated Sector) Sl. No.

Earlier Grade

Revised Grade on GCV Band

Previous Price (GR.A-D = K/R LF) (GR.E-G = KOR.NLF)

Revised Price for SECL

(Rs./Tonne)

(Rs./Tonne)

Percentage Increase %

1.

A

Above 7000

4100

4900

20%

2.

A

6700 to 7000

4100

4690

14%

3.

A

6400 to 6700

4100

4460

9%

4.

B

6100 to 6400

3990

4130

4%

5.

C

5800 to 6100

1300

3990

207%

6.

C

5500 to 5800

1300

2940

126%

7.

D

5200 to 5500

1110

2060

86%

8.

E

4900 to 5200

730

1890

159%

9.

E

4600 to 4900

730

1680

130%

10.

E

4300 to 4600

730

970

33%

11.

F

4000 to 4300

570

880

54%

Impact of Coal India Price Revision-SECL (Non-Regulated Sector) Sl. No.

Earlier Grade

Revised Grade on GCV Band

Previous Price (GR.A-D = K/R LF) (GR.E-G = KOR.NLF)

Revised Price for SECL

(Rs./Tonne)

(Rs./Tonne)

Percentage Increase %

1.

A

Above 7000

4100

4900

20%

2.

A

6700 to 7000

4100

4690

14%

3.

A

6400 to 6700

4100

4460

9%

4.

B

6100 to 6400

3990

4130

4%

5.

C

5800 to 6100

1690

3990

136%

6.

C

5500 to 5800

1690

3430

103%

7.

D

5200 to 5500

1440

2750

91%

8.

E

4900 to 5200

950

2520

165%

9.

E

4600 to 4900

950

2230

135%

10.

E

4300 to 4600

950

1460

54%

11.

F

4000 to 4300

740

1320

78%

COAL INSIGHTS 62 January 2012

aNNEXURE Impact of Coal India Price Revision-BCCL (Regulated Sector) Sl. No.

Earlier Grade

Revised Grade on GCV Band

Previous Price BCCL (NLF)

Revised Price for BCCL

(Rs./Tonne)

(Rs./Tonne)

Percentage Increase %

1.

A

Above 7000

3690

4900

33%

2.

A

6700 to 7000

3690

4690

27%

3.

A

6400 to 6700

3690

4460

21%

4.

B

6100 to 6400

3590

4130

15%

5.

C

5800 to 6100

1250

3990

219%

6.

C

5500 to 5800

1250

2940

135%

7.

D

5200 to 5500

1040

2060

98%

8.

E

4900 to 5200

830

1890

128%

9.

E

4600 to 4900

830

1680

102%

10.

E

4300 to 4600

830

970

17%

11.

F

4000 to 4300

660

880

33%

Impact of Coal India Price Revision-BCCL (Non-Regulated Sector) Sl. No.

Earlier Grade

Revised Grade on GCV Band

Previous Price BCCL (NFL)

Revised Price for BCCL

(Rs./Tonne)

(Rs./Tonne)

Percentage Increase %

1.

A

Above 7000

3690

4900

33%

2.

A

6700 to 7000

3690

4690

27%

3.

A

6400 to 6700

3690

4460

21%

4.

B

6100 to 6400

3590

4130

15%

5.

C

5800 to 6100

1630

3990

145%

6.

C

5500 to 5800

1630

3430

110%

7.

D

5200 to 5500

1350

2750

104%

8.

E

4900 to 5200

1080

2520

133%

9.

E

4600 to 4900

1080

2230

106%

10.

E

4300 to 4600

1080

1460

35%

11.

F

4000 to 4300

860

1320

53%

Impact of Coal India Price Revision-CCL (Regulated Sector) Sl. No.

Earlier Grade

Revised Grade on GCV Band

Previous Price CCL (LF)

Revised Price for CCL

Percentage Increase

1.

A

Above 7000

4100

4900

20%

2.

A

6700 to 7000

4100

4690

14%

3.

A

6400 to 6700

4100

4460

9%

4.

B

6100 to 6400

3990

4130

4%

5.

C

5800 to 6100

1500

3990

166%

6.

C

5500 to 5800

1500

2940

96%

7.

D

5200 to 5500

1250

2060

65%

8.

E

4900 to 5200

990

1890

91%

9.

E

4600 to 4900

990

1680

70%

10.

E

4300 to 4600

990

970

-2%

11.

F

4000 to 4300

750

880

17%

Impact of Coal India Price Revision-CCL (Non-Regulated Sector) Sl. No.

Earlier Grade

Revised Grade on GCV Band

Previous Price CCL (LF)

Revised Price for CCL

(Rs./Tonne)

(Rs./Tonne)

Percentage Increase %

1.

A

Above 7000

4100

4900

20%

2.

A

6700 to 7000

4100

4690

14%

3.

A

6400 to 6700

4100

4460

9%

4.

B

6100 to 6400

3990

4130

4%

5.

C

5800 to 6100

1950

3990

105%

6.

C

5500 to 5800

1950

3430

76%

7.

D

5200 to 5500

1630

2750

69%

8.

E

4900 to 5200

1290

2520

95%

9.

E

4600 to 4900

1290

2230

73%

10.

E

4300 to 4600

1290

1460

13%

11.

F

4000 to 4300

980

1320

35%

COAL INSIGHTS 63 January 2012

aNNEXURE Impact of Coal India Price Revision-MCL (Regulated Sector) Sl. No.

Earlier Grade

Revised Grade on GCV Band

Previous Price MCL (NLF)

Revised Price for MCL

(Rs./Tonne)

(Rs./Tonne)

Percentage Increase %

1.

A

Above 7000

3690

4900

33%

2.

A

6700 to 7000

3690

4690

27%

3.

A

6400 to 6700

3690

4460

21%

4.

B

6100 to 6400

3590

4130

15%

5.

C

5800 to 6100

1250

3990

219%

6.

C

5500 to 5800

1250

2940

135%

7.

D

5200 to 5500

1040

2060

98%

8.

E

4900 to 5200

830

1890

128%

9.

E

4600 to 4900

830

1680

102%

10.

E

4300 to 4600

830

970

17%

11.

F

4000 to 4300

660

880

33%

Impact of Coal India Price Revision-MCL (Non-Regulated Sector) Sl. No.

Earlier Grade

Revised Grade on GCV Band

Previous Price MCL (NLF)

Revised Price for MCL

(Rs./Tonne)

(Rs./Tonne)

Percentage Increase %

1.

A

Above 7000

3690

4900

33%

2.

A

6700 to 7000

3690

4690

27%

3.

A

6400 to 6700

3690

4460

21%

4.

B

6100 to 6400

3590

4130

15%

5.

C

5800 to 6100

1370

3990

191%

6.

C

5500 to 5800

1370

3430

150%

7.

D

5200 to 5500

1140

2750

141%

8.

E

4900 to 5200

950

2520

165%

9.

E

4600 to 4900

950

2230

135%

10.

E

4300 to 4600

950

1460

54%

11.

F

4000 to 4300

740

1320

78%

Impact of Coal India Price Revision-NCL (Regulated Sector) Sl. No.

Earlier Grade

Revised Grade on GCV Band

Previous Price NCL (LF)

Revised Price for NCL

(Rs./Tonne)

(Rs./Tonne)

Percentage Increase %

1.

A

Above 7000

4100

4900

20%

2.

A

6700 to 7000

4100

4690

14%

3.

A

6400 to 6700

4100

4460

9%

4.

B

6100 to 6400

3990

4130

4%

5.

C

5800 to 6100

1280

3990

212%

6.

C

5500 to 5800

1280

2940

130%

7.

D

5200 to 5500

1080

2060

91%

8.

E

4900 to 5200

740

1890

155%

9.

E

4600 to 4900

740

1680

127%

10.

E

4300 to 4600

740

970

31%

11.

F

4000 to 4300

580

880

52%

Impact of Coal India Price Revision-NCL (Non-Regulated Sector) Sl. No.

Earlier Grade

Revised Grade on GCV Band

Previous Price NCL (LF)

Revised Price for NCL

(Rs./Tonne)

(Rs./Tonne)

Percentage Increase %

1.

A

Above 7000

4100

4900

20%

2.

A

6700 to 7000

4100

4690

14%

3.

A

6400 to 6700

4100

4460

9%

4.

B

6100 to 6400

3990

4130

4%

5.

C

5800 to 6100

1660

3990

140%

6.

C

5500 to 5800

1660

3430

107%

7.

D

5200 to 5500

1400

2750

96%

8.

E

4900 to 5200

960

2520

163%

9.

E

4600 to 4900

960

2230

132%

10.

E

4300 to 4600

960

1460

52%

11.

F

4000 to 4300

750

1320

76%

COAL INSIGHTS 64 January 2012

aNNEXURE Impact of Coal India Price Revision-WCL (Regulated Sector) Sl. No. 1.

Earlier Grade A

Previous Price WCL

Revised Grade on GCV Band Above 7000

Revised Price for WCL

(Rs./Tonne)

Percentage Increase

(Rs./Tonne)

4100

%

4900

20%

2.

A

6700 to 7000

4100

4690

14%

3.

A

6400 to 6700

4100

4460

9%

4.

B

6100 to 6400

3990

4130

4%

5.

C

5800 to 6100

1410

3990

183%

6.

C

5500 to 5800

1410

2940

109%

7.

D

5200 to 5500

1330

2060

55%

8.

E

4900 to 5200

1090

1890

73%

9.

E

4600 to 4900

1090

1680

54%

10.

E

4300 to 4600

1090

970

-11%

11.

F

4000 to 4300

860

880

2%

Impact of Coal India Price Revision-WCL (Non-Regulated Sector) Sl. No. 1.

Earlier Grade A

Previous Price WCL

Revised Grade on GCV Band Above 7000

Revised Price for WCL

(Rs./Tonne)

Percentage Increase

(Rs./Tonne)

4100

%

4900

20%

2.

A

6700 to 7000

4100

4690

14%

3.

A

6400 to 6700

4100

4460

9%

4.

B

6100 to 6400

3990

4130

4%

5.

C

5800 to 6100

1830

3990

118%

6.

C

5500 to 5800

1830

3430

87%

7.

D

5200 to 5500

1730

2750

59%

8.

E

4900 to 5200

1420

2520

77%

9.

E

4600 to 4900

1420

2230

57%

10.

E

4300 to 4600

1420

1460

3%

11.

F

4000 to 4300

1120

1320

18%

Summary on Impact of Coal Price Revision (G Grade only) - %age Increase Company Name ECL (Raniganj) SECL BCCL

Sector

Min

Max

Avg

Regulated

37

39

38

Non – Regulated

69

73

71

Regulated

44

47

46

Non – Regulated

77

80

79

Regulated

32

34

33

Non – Regulated

62

66

64

CCL

Regulated

22

24

23

Non – Regulated

50

53

52

MCL

Regulated

32

34

33

Non – Regulated

77

80

79

NCL

Regulated

44

47

46

Non – Regulated

50

80

70

WCL

Regulated

-3

44

13

Non – Regulated

16

19

18

COAL INSIGHTS 65 January 2012

aNNEXURE Summary on Impact of Coal Price Revision (A to G Grades) - %age Increase Company Name ECL (Raniganj)

SECL

BCCL

CCL

MCL

NCL

WCL

Sector

Min

Max

Avg

Regulated

5

132

46

Non – Regulated

10

110

52

Regulated

4

207

70

Non – Regulated

4

165

75

Regulated

4

165

75

Non – Regulated

15

219

66

Regulated

-2

166

44

Non – Regulated

4

105

48

Regulated

15

219

66

Non – Regulated

15

191

89

Regulated

4

212

70

Non – Regulated

4

163

73

Regulated

-11

183

39

Non – Regulated

3

118

37

Revised Grade- wise GCV based Basic prices of Run of Mine (ROM) coal of the SCCL Grade of Coal

Gross Calorific Value per Kilo Calories / per Kilogram

ROM Coal (in Rs.)

G1

Above 7000

3542

G2

6701 to 7000

3393

G3

6401 to 6700

3244

G4

6101 to 6400

3032

G5

5801 to 6100

2886

G6

5501 to 5800

2360

G7

5201 to 5500

1840

G8

4901 to 5200

1700

G9

4601 to 4900

1500

G10

4301 to 4600

1400

G11

4001 to 4300

1130

G12

3701 to 4000

910

G13

3401 to 3700

690

G14

3101 to 3400

610

G15

2801 to 3100

510

G16

2501 to 2800

474

G17

2201 to 2500

420

COAL INSIGHTS 66 January 2012

Power sector update ALL INDIA ENERGY GENERATION, GENERATION (GWH) Category / Regions

Monitored Capacity (MW)

December 2011

Target April 2011 to March 2012

PROGRAMME

ACTUAL*

ACTUAL SAME MONTH (2010-11)

% OF PROGRAMME 101.95

THERMAL

122666.92

712234.00

61512.00

62710.97

57749.66

NUCLEAR

4780.00

25130.00

2100.00

2606.18

2415.88

38748.40

112050.00

7464.60

7270.46

0.00

5586.00

165.00

130.06

166195.32

855000.00

71241.60

72717.67

THERMAL

29983.26

173757.00

15023.00

16052.08

NUCLEAR

1620.00

8760.00

660.00

HYDRO

14978.25

53474.07

TOTAL

46581.51

THERMAL NUCLEAR

% OF LAST YEAR

PROGRAMME

108.59

524362.00

124.10

107.88

18951.00

6990.72

97.40

104.00

90355.16

165.42

78.82

78.62

5361.00

67321.68

102.07

108.02

639029.16

14610.23

106.85

109.87

127908.00

1005.18

975.33

152.30

103.06

6569.00

2926.02

3110.96

2833.13

106.32

109.81

44887.90

235991.07

18609.02

20168.22

18418.69

108.38

109.50

179364.90

42554.31

246627.00

21674.00

22486.78

20850.11

103.75

107.85

181016.00

18400.00

9874.00

864.00

929.47

974.99

974.58

95.33

7386.00

HYDRO

7392.00

14644.91

1439.71

1179.93

1066.08

81.96

110.68

11056.74

TOTAL

7392.00

14644.91

1439.71

1179.93

1066.08

81.96

110.68

11056.74

THERMAL

24780.80

156395.00

13093.00

13354.28

12277.75

102.00

108.77

114691.00

NUCLEAR

1320.00

6496.00

576.00

671.56

465.56

116.59

144.25

4996.00

HYDRO

11372.45

30493.04

2239.35

2368.95

2338.69

105.79

101.29

23186.35

TOTAL

37473.25

193384.04

15908.35

16394.79

15082.00

103.06

108.70

142873.35

24490.05

131047.00

11350.00

10447.68

9634.40

92.05

108.44

97464.00

HYDRO

3847.70

9305.99

613.14

416.06

556.72

67.86

74.73

7702.30

TOTAL

28337.75

140352.99

11963.14

10863.74

10191.12

90.81

106.60

105166.30

858.50

4408.00

372.00

370.41

377.17

99.57

98.21

3283.00

HYDRO

1158.00

4131.99

246.38

194.73

196.10

79.04

99.30

3521.87

TOTAL

2016.50

8539.99

618.38

565.14

573.27

91.39

98.58

6804.87

HYDRO BHUTAN IMP TOTAL NORTHERN REGION

WESTERN REGION

SOUTHERN REGION

EASTERN REGION THERMAL

NORTH EASTERN REGION THERMAL

Provisional based on actual-cum-assessment

COAL INSIGHTS 68 January 2012

Power sector update PROGRAMME AND PLANT LOAD FACTOR PLANT LOAD FACTOR % APRIL 2011 – December 2011

December 2011

APRIL 2011 - December 2011

ACTUAL SAME PERIOD (2010-11)

% OF PROGRAMME

% OF LAST YEAR

PROGRAMME

ACTUAL*

ACTUAL SAME MONTH (2010-11)

PROGRAMME

ACTUAL*

ACTUAL SAME PERIOD (2010-11)

517115.24

484860.24

98.62

106.65

69.12

75.83

76.21

68.20

72.10

72.88

23789.55

17854.01

125.53

133.24

60.31

73.28

71.21

61.35

75.41

59.32

107512.73

90169.34

118.99

119.23

5028.28

5360.09

93.79

93.81

653445.80

598423.68

102.26

109.23

130496.17

120468.91

102.02

108.32

70.78

81.55

80.93

71.26

76.98

76.75

7992.07

6661.57

121.66

119.97

58.36

83.40

80.92

65.48

74.75

62.30

54177.60

46758.72

120.72

115.89

192676.84

173889.20

107.42

110.80

182193.40

172205.16

100.65

105.80

70.72

77.09

78.14

68.17

70.80

72.74

10080.76

7095.87

136.48

142.07

63.11

67.90

71.22

60.82

83.01

58.43

15808.60

10713.81

142.98

147.55

208082.76

190014.84

104.32

109.51

115061.11

106051.62

100.32

108.50

71.65

81.23

76.78

71.65

80.25

76.98

5716.75

4096.57

114.43

139.55

58.65

68.38

56.89

57.35

65.62

56.43

25574.22

22042.14

110.30

116.02

146352.08

132190.33

102.43

110.71

86035.20

82945.75

88.27

103.72

63.30

63.85

67.80

62.52

62.10

65.74

8501.35

7258.17

110.37

117.13

94536.55

90203.88

89.89

104.80

3329.62

3188.84

101.42

104.41

0.00

0.00

0.00

0.00

0.00

0.00

3440.13

3396.50

97.68

101.28

6769.75

6585.34

99.48

102.80

ACTUAL

Source: Central Electricity Authority

COAL INSIGHTS 69 January 2012

Power sector update List of utility/organisation whose PLF achievement were lower than the respective programme during December 2011

Programme

Achievement

Description

December 2011 Target

December 2010

Achivement

Target

Achivement

0.00

1158.00

1986.00

2635.75

71.00

0.00

100.00

0.00

CAPACITY ADDITION (MW)

PLF in %

Name of Power Station

Capacity Addition & Generation during Dec 2011

THERMAL Shortfall

HYDRO NUCLEAR TOTAL

I. CENTRAL

0.00

0.00

220.00

0.00

71.00

1158.00

2306.00

2635.75

GENERATION (MU)

BADARPUR TPS

85.60

69.78

15.82

THERMAL

61512.00

62710.99

60885.12

57749.66

NUCLEAR

2100.00

2606.18

20221.00

2415.88

KAHALGAON TPS

87.14

57.77

29.37

HYDRO

7464.60

7270.46

7206.04

6990.72

165.00

130.06

247.40

165.42

71241.60

72717.69

70359.56

67321.68

BHUTAN IMPORT SINGRAULI STPS

92.47

92.16

0.31

TOTAL

Note: Generation (MU) achieved in December 2011 is provisional.

NEYVELI(EXT) TPS

67.84

MUZAFFARPUR TPS

64.33

3.51

27.49

0.00

27.49

CSPGCL

88.88

80.16

8.72

GMDCL

75.27

6.87

68.40

JSEB

23.39

9.39

14.00

BSEB

17.34

7.61

9.73

TVNL

73.60

71.22

2.38

Target/Achievement in capacity addition (MW) during December 2011

II. STATE

Achievement in generation (MU) during December 2011

Source: Central Electricity Authority

Sector-wise PLF(%) programme and achievements (thermal) December 2011

April 2011 - December 2011

SECTOR PROG. (%)

ACH. (%)*

PROG. (%)

ACH. (%)*

Central Sector

72.52

82.98

73.15

80.15

State Sector

67.04

72.02

64.61

66.11

Pvt. UTL Sector

71.27

75.44

76.93

78.09

All India

69.12

75.83

68.20

72.10

Source: Central Electricity Authority

All India PLF (%) during December 2011

* Provisional based on actual-cum Assessment Source: Central Electricity Authority

COAL INSIGHTS 70 January 2012

Source: Central Electricity Authority

Power sector update Capacity Addition for December 2011 and April 2011 - December 2011 (MW) Schemes

Target 2011-12

Status of Schemes

Central State Thermal Pvt. Total Central State Hydro Pvt. Total Central Nuclear Total Central State All India Pvt. Total Source: Central Electricity Authority

3570.00 4101.00 6965.00 14636.00 715.00 195.00 1170.00 2080.00 1000.00 1000.00 5285.00 4296.00 8135.00 17716.00

December 2011 Target 0.00 0.00 0.00 0.00 71.00 0.00 0.00 71.00 0.00 0.00 71.00 0.00 0.00 71.00

April 2011 - December 2011

Achievement 660.00 0.00 498.00 1158.00 0.00 0.00 0.00 0.00 0.00 0.00 660.00 0.00 498.00 1158.00

Target 3070.00 3351.00 5780.00 12201.00 495.00 123.00 1170.00 1788.00 0.00 0.00 3565.00 3474.00 6950.00 13989.00

Achievement 2820.00 1500.00 5964.50 10284.50 0.00 81.00 1100.00 1181.00 0.00 0.00 2820.00 1581.00 7064.50 11465.50

Deviation (+) / (-) -250.00 -1851.00 184.50 -1916.50 -495.00 -42.00 -70.00 -607.00 0.00 0.00 -745.00 -1893.00 114.50 -2523.50

Programme and Achievememt of Energy Generation (MU) Gen. Sch. Target 20011-2012 Sector-wise Programme Thermal Central Sector 279561.00 23880.00 State Sector 297818.00 26058.00 Pvt.IPP Sector 108835.00 9486.00 Pvt.UTL Sector 26020.00 2088.00 Total 712234.00 61512.00 Hydro Central Sector 42779.02 2469.21 State Sector 61941.98 4529.03 Pvt.IPP Sector 5764.00 334.69 Pvt.UTL Sector 1565.00 131.67 Total 112050.00 7464.60 Nuclear Central Sector 25130.00 2100.00 Total 25130.00 2100.00 Bhutan Import 5586.00 165.00 All India Central Sector 347470.02 28449.21 State Sector 359759.98 30587.03 Pvt. Sector 142184.00 12040.36 Total 855000.00 71241.60 * Provisional based on actual-cum-Assesment

December 2011 Achievement*

April 2011 - December 2011 % Ach.

Programme

Achievement*

% Ach.

24560.34 26745.62 9225.58 2179.45 62710.99

102.85 102.64 97.25 104.38 101.95

205918.00 218960.00 79651.00 19833.00 524362.00

205058.52 216415.21 75623.62 20017.91 517115.26

99.58 98.84 94.94 100.93 98.62

2280.18 4594.29 281.43 114.56 7270.46

92.34 101.44 84.09 87.01 97.40

35637.02 48781.25 4767.71 1169.18 90355.16

43211.58 56614.10 6425.15 1262.33 107513.16

121.25 116.06 134.76 107.97 118.99

2606.18 2606.18 130.06

124.10 124.10 78.82

18951.00 18951.00 5361.00

23789.55 23789.55 5028.28

125.53 125.53 93.79

29446.70 31339.91 11801.02 72717.69

103.51 102.46 98.01 102.07

260506.02 267741.25 105420.89 639029.16

All India energy generation during April 2011 - December 2011

Capacity addition target & achievement (MW) April 2011 - December 2011

Source: Central Electricity Authority

272059.65 104.44 273029.31 101.98 103329.01 98.02 653446.25 102.26 Source: Central Electricity Authority

Source: Central Electricity Authority

COAL INSIGHTS  71  January 2012

Power sector update List of critical thermal power stations having critical coal stock of less than 7 days (as on 31-12-2011) NORTHERN 1 Badarpur 2 Yamuna Nagar 3 Kota TPS 4 Suratgarh 5 Anpara TPS 6 Obra TPS 7 Panipat 8 Chabbra 9 Dadri (NCTPP) 10 Rihand STPS 11 Singrauli STPS 12 Unchahar 13 Anpara C WESTERN 13 Ukai 14 Satpura TPS 15 Sikka 16 Dhanu 17 Sanjay Gandhi 18 Parli TPS 19 Paras TPS 20 Vindhyachal 21 Khaparkheda SOUTHERN 22 Dr. N. Tata Rao 23 North Chennai 24 Rayalaseema 25 Simhadri 26 Ramagundem STPS 27 Ennore 28 Raichur 29 North Chennai 30 Bellary 31 Kothagudem EASTERN 32 Muzaffarpur TPS 33

Kahalgaon

34 35 36 37 38 39 40 41 42 43 44 45

Bokaro-B Talcher (Old) TPS Durgapur steel TPS Kodarma TPS Talcher STPS Sterlite TPP Kolaghat Bakreswar TPS Sagardighi Santaldih Farakka Mejia

Due to less receipt of coal during the month of Decemmber, 2011 Due to less receipt of coal during the month of Decemmber, 2011 Due to diversion of rakes to Chabbra TPS Due to diversion of rakes to Chabbra TPS Due to less receipt of coal during the month of Decemmber, 2011 from NCL Due to less receipt of coal during the month of Decemmber, 2011 from NCL Due to higher generation Due to less allocation of coal because inadequate availability of domestic coal Due to less receipt from CCL during the month of Decemmber, 2011 Due to less receipt of coal during the month of Decemmber, 2011 from NCL Due to higher generation Due to less receipt of coal during the month of Decemmber, 2011 Due to less receipt of coal during the month of Decemmber, 2011 Due to less import Due to less receipt of coal during the month of Decemmber, 2011 Due to less receipt of coal during the month of Decemmber, 2011 Due to less receipt from SECL during the month of Decemmber, 2011 Due to less receipt of coal during the month of Decemmber, 2011 Due to less receipt from SCCL during the month of Decemmber, 2011 Due to less receipt of coal from MCL during the month of Decemmber, 2011 Due to higher generation Due to unloading constraints Due to higher generation Due to less receipt of coal from MCL during the month of Decemmber, 2011 Due to less receipt from SCCL during the month of Decemmber, 2011 Due to less receipt from MCL Due to less receipt of coal during the month of Decemmber, 2011 Due to less receipt of coal from MCL during the month of Decemmber, 2011 Due to higher generation Due to less receipt of coal from MCL during the month of Decemmber, 2011 Due to less receipt of coal from captive block during the month of Decemmber, 2011 Due to higher generation coal supply regulated by TPS Due to inadequate coal availability in linked mine ECL (Rajmahal) and inability of railways to supply more imported rakes due to change in tracks.

Due to less receipt of coal from MCL during the month of Decemmber, 2011 Due to less receipt of coal during the month of Decemmber, 2011 Coal supply yet to start Coal supply yet to start Due to less receipt of coal from MCL during the month of Decemmber, 2011 Due to less receipt of coal from MCL during the month of Decemmber, 2011 Due to higher generationless during the month of Decemmber, 2011 Due to less receipt of coal during the month of Decemmber, 2011 Due to higher generation Due to less receipt of coal during the month of Decemmber, 2011 Due to inadequate coal availability in linked mine ECL (Rajmahal) Due to Higher Turn around time of rakes between Raniganj and the power station and no import

Source: Central Electricity Authority

COAL INSIGHTS  72  January 2012

Power sector update Power Supply Position (Provisional) State/System/ Region Chandigarh

(Figures in net MU)

December 2011

December 2011

Requirement

Availability

Surplus/Deficit (-)

(MU)

(MU)

(MU)

103

102

-1

(%) -1.0

Requirement

Availability

Surplus/Deficit (-)

(MU)

(MU)

(MU)

1,240

1,237

-3

(%) -0.2

Delhi

1,783

1,770

-13

-0.7

21,375

21,310

-65

-0.3

Haryana

2,741

2,627

-114

-4.2

28,275

27,058

-1,217

-4.3

702

690

-12

-1.7

6,037

5,975

-62

-1.0 -23.2

Himachal Pradesh Jammu & Kashmir

1,378

1,014

-364

-26.4

10,292

7,901

-2,391

Punjab

2,796

2,619

-177

-6.3

36,000

34,830

-1,170

-3.3

Rajasthan

4,973

4,712

-261

-5.2

36,751

35,281

-1,470

-4.0

Uttar Pradesh

6,943

5,881

-1,062

-15.3

60,585

53,911

-6,674

-11.0

847

823

-24

-2.8

7,763

7,531

-232

-3.0

22,266

20,238

-2,028

-9.1

208,318

195,034

-13,284

-6.4

Uttarakhand Northern Region Chattisgarh

1,299

1,233

-66

-5.1

11,028

10,695

-333

-3.0

Gujarat

6,695

6,668

-27

-0.4

55,992

55,778

-214

-0.4

Madhya Pradesh Maharashtra

5,894

4,678

-1,216

-20.6

35,655

30,082

-5,573

-15.6

14,061

11,128

-2,933

-20.9

104,931

87,076

-17,855

-17.0 -10.5

Daman & Diu

193

173

-20

-10.4

1,634

1,463

-171

Dadar Nagar Haveli

416

413

-3

-0.7

3,329

3,298

-31

-0.9

Goa

275

268

-7

-2.5

2,289

2,263

-26

-1.1 -11.3

Western Region

28,833

24,561

-4,272

-14.8

214,858

190,655

-24,203

Andhra Pradesh

7,668

6,736

-932

-12.2

66,747

62,463

-4,284

-6.4

Karnataka

5,519

4,805

-714

-12.9

43,020

38,630

-4,390

-10.2

Kerala

1,711

1,672

-39

-2.3

14,531

14,246

-285

-2.0

Tamil Nadu

6,683

5,879

-804

-12.0

63,602

59,144

-4,458

-7.0

Puducherry

163

161

-2

-1.2

1,652

1,627

-25

-1.5

Lakshadweep #

3

3

0

0

28

28

0

0

21,744

19,253

-2,491

-11.5

189,552

176,110

-13,442

-7.1

Bihar

1,248

1,038

-210

-16.8

10,666

8,417

-2,249

-21.1

DVC

1,286

1,274

-12

-0.9

11,906

11,533

-373

-3.1

538

519

-19

-3.5

4,570

4,447

-123

-2.7

Orissa

1,773

1,757

-16

-0.9

17,032

16,912

-120

-0.7

West Bengal

Southern Region

Jharkhand

2,778

2,728

-50

-1.8

29,173

28,882

-291

-1.0

Sikkim

27

27

0

0.0

265

261

-4

-1.5

Andaman- Nicobar#

21

21

0

0

181

141

-40

-22

7,650

7,343

-307

-4.0

73,612

70,452

-3,160

-4.3

57

52

-5

-8.8

445

406

-39

-8.8

467

434

-33

-7.1

4,652

4,394

-258

-5.5

Eastern Region Arunachal Pradesh Assam Manipur Meghalaya

57

53

-4

-7.0

440

403

-37

-8.4

150

114

-36

-24.0

1,447

1,107

-340

-23.5

Mizoram

36

32

-4

-11.1

293

261

-32

-10.9

Nagaland

47

45

-2

-4.3

443

406

-37

-8.4

Tripura N. Eastern Region All India

74

70

-4

-5.4

720

680

-40

-5.6

888

800

-88

-9.9

8,440

7,657

-783

-9.3

81,381

72,195

-9,186

-11.3

694,780

639,908

-54,872

-7.9

# Lakshadweep and A & N Islands stand-alone systems, power supply position of these, does not form part of regional requirement and availability.

Source: Central Electricity Authority

COAL INSIGHTS  73  January 2012

Power sector update Peak Demand/Peak Met (Provisional) State/System/ Region Chandigarh Delhi

December 2011 Peak Demand

Peak Met

(MU)

(MU)

(Figures in net MW) April’11 - December 2011

Surplus/Deficit (-) (MU)

Peak Demand

Peak Met

(MU)

(MU)

(%)

Surplus/Deficit (-) (MU)

(%)

208

208

0

0.0

263

263

0

0.0

3,619

3,619

0

0.0

5,031

5,028

-3

-0.1

Haryana

4,985

4,727

-258

-5.2

6,533

6,259

-274

-4.2

Himachal Pradesh

1,251

1,235

-16

-1.3

1,279

1,238

-41

-3.2

Jammu & Kashmir

2,671

1,852

-819

-30.7

2,671

1,852

-819

-30.7

Punjab

5,713

5,534

-179

-3.1

10,471

8,701

-1,770

-16.9

Rajasthan Uttar Pradesh Uttarakhand Northern Region Chattisgarh Gujarat Madhya Pradesh

7,556

6,884

-672

-8.9

8,188

6,884

-1,304

-15.9

11,706

8,961

-2,745

-23.4

12,038

11,616

-422

-3.5 -8.6

1,751

1,601

-150

-8.6

1,751

1,601

-150

36,918

32,002

-4,916

-13.3

40,248

37,117

-3,131

-7.8

2,775

2,678

-97

-3.5

3,239

2,851

-388

-12.0

10,228

10,070

-158

-1.5

10,951

10,759

-192

-1.8

8,843

7,368

-1,475

-16.7

9,151

7,842

-1,309

-14.3

Maharashtra

21,069

15,766

-5,303

-25.2

21,069

16,340

-4,729

-22.4

Daman & Diu

284

259

-25

-8.8

301

276

-25

-8.3

Dadar Nagar Haveli

580

580

0

0.0

615

605

-10

-1.6

464

406

-58

-12.5

514

471

-43

-8.4

Western Region

Goa

42,089

34,613

-7,476

-17.8

42,352

35,952

-6,400

-15.1

Andhra Pradesh

11,688

10,453

-1,235

-10.6

13,254

11,591

-1,663

-12.5 -16.1

Karnataka

8,814

7,650

-1,164

-13.2

9,121

7,650

-1,471

Kerala

3,233

3,139

-94

-2.9

3,281

3,139

-142

-4.3

Tamil Nadu

11,078

9,347

-1,731

-15.6

11,911

10,566

-1,345

-11.3

Puducherry

287

283

-4

-1.4

335

320

-15

-4.5

Lakshadweep # Southern Region

8

8

0

0

8

8

0

0

32,528

28,383

-4,145

-12.7

34,072

31,489

-2,583

-7.6

Bihar

1,822

1,433

-389

-21.4

2,031

1,738

-293

-14.4

DVC

2,065

1,963

-102

-4.9

2,318

2,018

-300

-12.9

Jharkhand

886

853

-33

-3.7

1,030

853

-177

-17.2

Orissa

2,987

2,691

-296

-9.9

3,589

3,526

-63

-1.8

West Bengal

6,250

6,064

-186

-3.0

6,555

6,378

-177

-2.7

80

80

0

0.0

100

95

-5

-5.0

Sikkim Andaman-Nicobar#

48

48

0

0

48

48

0

0

13,680

12,703

-977

-7.1

14,505

13,971

-534

-3.7

Arunachal Pradesh

112

106

-6

-5.4

121

118

-3

-2.5

Assam

966

949

-17

-1.8

1,112

1,053

-59

-5.3

Eastern Region

Manipur

116

115

-1

-0.9

116

115

-1

-0.9

Meghalaya

273

251

-22

-8.1

319

262

-57

-17.9

Mizoram

75

70

-5

-6.7

79

78

-1

-1.3

Nagaland

111

105

-6

-5.4

111

105

-6

-5.4 -0.5

Tripura N -Eastern Region All India

167

166

-1

-0.6

215

214

-1

1,767

1,648

-119

-6.7

1,920

1,782

-138

-7.2

126,982

109,349

-17,633

-13.9

127,724

114,233

-13,491

-10.6

# Lakshadweep and A & N Islands stand-alone systems, power supply position of these, does not form part of regional requirement and availability.

Source: Central Electricity Authority

COAL INSIGHTS 74 January 2012

Power sector update Power supply to agricultural sector during December 2011 State/Region Northern Region Chandigarh Delhi Haryana HP J&K Punjab Rajasthan Uttar Pradesh Uttarakhand Western Region Chattisgarh Gujarat Madhya Pradesh Maharashtra Goa Southern Region Andhra Pradesh Karnataka Kerala Tamil Nadu Puducherry Eastern Region Bihar Jharkhand Orissa West Bengal

Average hours of supply 24 hrs./day 24 hrs./day Three Phase Supply : average 6.50 hrs/day 24 hrs./day – Three phase supply: 4.94 hrs/day Three phase supply: 06.00 hrs/day 9.11 hrs./day 22.09 hrs./day

–

Three phase supply: 18 hrs/day – Only 8 hours power supply in staggered form in rotation of day and night is given to Agriculture. No supply during rest of 16 hours.

Jyotigram Yojana 24 hrs.

Three phase supply: 10:11 hrs /day (average) Single phase supply: 00:00 hrs./Day (average) Three phase supply: 8 hrs/day (average) Single phase supply: 16 hrs/day (average) No restriction Three phase supply: 07 hrs/day.

Three phase/single phase supply: 06 hrs/day Three phase supply: 9 hrs/day

No restrictions No restrictions

– No supply: 6-12 hrs/day Single phase supply: 15 hrs/day

About 18 hrs About 20 hrs 24 hrs.

Average about 23 hrs

–

* Data not furnished for current month.

Transmission lines (prog & achiv) December 2011

Sub-Stations (Prog & Achiv) December 2011

Fig. in ckt Kms Voltage Level/Sector +/- 800 kV HVDC Central Sector State Sector Total +/- 500 kV HVDC Central Sector JV/Private Sector Total 765 kV Central Sector State Sector Total 400 kV Central Sector State Sector JV/Private Sector Total 220kV Central Sector State Sector JV/Private Sector Total Grand Total

Programme 2011-12

Dec 2011 Prog.

Achv.

Apr 2011-Dec 2011 Prog.

Achv.

0 0 0

0 0 0

0 0 0

0 0 0

0 0 0

0 0 0

0 0 0

0 0 0

0 0 0

0 0 0

822 2 824

0 0 0

0 1 1 611 364 0 975

13 2 15 4469 2066 1471 8006

13 1 14

6762 2626 3013 12401

675 466 438 1579

5141 1269 988 7398

575 5992 0 6567 19792

86 23 529 125 616 412 4842 3452 0 0 0 2 702 435 5371 3579 2281 1410 13392 10991 Source: Central Electricity Authority

Fig. in MVA/MW Voltage Level/Sector

Programme 2011-12

Dec 2011 Prog.

Apr 2011-Dec 2011

Achv.

Prog.

Achv.

+/- 500 kV HVDC Central Sector

0

0

0

0

0

State Sector

0

0

0

0

0

Total

0

0

0

0

0 3000

765 kV Central Sector

3315

0

3000

0

State Sector

1000

0

0

1000

0

Total

4315

0

3000

1000

3000

400 kV Central Sector

2630

1000

945

2000

4780

State Sector

5780

1845

2500

4920

4130

JV/Private Sector Total

0

0

0

0

0

8410

2845

3445

6920

8910

220 kV Central Sector State Sector JV/Private Sector

940

0

0

840

180

13715

3670

2760

8640

8755

0

0

0

0

127

Total

14655

3670

2760

9480

9062

Grand Total

27380

6515

9205

17400

20972

COAL INSIGHTS 75 January 2012

Source: Central Electricity Authority

Power sector update Power cuts on industries during December 2011 State/Region

Energy Cut

Demand Cut

Northern Region Chandigarh

No notified power cut

Delhi

No notified power cut 0.96 MU/day and 400MW ( different for different days)

Haryana* HP

2.00 MU / day on HT/LT industries

0 MW cut from 18:30 hrs to 21:30 hrs.(peak hrs.) on HT/LT industries.

J&K

-

Punjab* Rajasthan

1.8 MU/day on HT/LT industries

600 MW cut on HT/LT industries from 18:00 to 21:00 hrs.

0.9 to 3.48 MU/day on HT/LT industries

145 MW to 450 MW cut on HT/LT industries different hrs. on different days

Uttar Pradesh

8.5 MU/day and 354 MW ( different timings)

Uttarakhand*

0 to 2.56 MU/day on HT/LT industries on different days.

0 to 70 MW cut on HT/LT industries for different hours on different days.

Nil

Nil

Western Region Chattisgarh Gujarat

All industries are allowed to run their units on all days of week and if they want to avail staggered holiday, then they will have to stagger on notified day only and cannot avail as per their choice. All industries are required to keep their recess timings staggered.

Madhya Pradesh

Nil

Nil

Maharashtra

Nil

Nil

Goa

Nil

Nil

Southern Region Andhra Pradesh

All EHT, HT & LT industries not to avail power except lighting loads during peak hours (18:30 to 22:30 hrs.).One day power holidays to industries. Domestic cut: Hyderabad City 2 hrs., District HQ 4/6 hrs., Mandals 8 hrs.; However, there was load shedding of up to 2296 MW (859.20 MU for the month)

Karnataka

One day Power Holiday to industries (bangalore City); However, there was load shedding up to 1810 MW (668.53 MU for the month)

Kerala

Nil; However, there was load shedding up to 500 MW (21.78 MU for the month)

Tamil Nadu

20% power cut for HT and Commercial consumers. 1 hour Load shedding for Chennai, 2/3 Hours for Urban and Rural areas; However, there was load shedding up to 2583 MW (737.506 MU for the month).

Puducherry

Nil; However, there was load shedding up to 20 MW (0.12 MU for the month)

Eastern Region Bihar

No notified cuts

Jharkhand

No notified cuts

Orissa

No notified cuts

West Bengal

No notified cuts

Note: Although some states have reported “No Notified Power Cuts”, load shedding/restrictions are imposed on industries on day. *Data not furnished for current month.

COAL INSIGHTS 76 January 2012

Power sector update Generation capacity addition during 2011-12 (Programme & Achievement) Sl. No.

Unit Name

Unit No.

State

Company

Type

Capacity (MW) Prog.

Commissioning Schedule

Ach.

As per Prog.

Actual (A)

1st Quarter (April - June 2011) CENTRAL SECTOR 1

Koderma #

1

Jharkhand

DVC

TH

500.00

500.00

June, 11

20.07.11 (A)

STATE SECTOR 2

Priyadarshini Jurala

6

AP

APGENCO

HY

39.00

39.00

June,11

09.06.11(A)

3

Myntdu

1

Meghalaya

MeECL

HY

42.00

42.00

June,11

23.11.11(A)

4

Khaperkheda TPS Expn #

5

Maharashtra

MSPGCL

TH

500.00

500.00

June,11

05.08.11(A)

5

Kothagudem TPP - VI

11

A.P.

APGENCO

TH

500.00

500.00

June,11

26.06.11(A)

1

H.P.

Everest PPL

HY

50.00

50.00

May,11

06.08.11(A)

2

H.P.

Everest PPL

HY

50.00

50.00

June,11

14.08.11(A)

Private SECTOR 6 7

Malana-II

8

Karcham Wangtoo

1

H.P.

JKHCL

HY

250.00

250.00

May,11

24-05-11(A)

9

JSW Ratnagiri TPP #

3

Maharashtra

JSW Energy (Ratnagiri) ltd

TH

300.00

300.00

May,11

06-05-11 (A)

10

Maithon RB TPP #

1

Jharkhand

DVC- Tata JV

TH

525.00

525.00

June,11

30.06.11 (A)

11

Udupi TPP #

2

Karnatka

UPCL

TH

600.00

600.00

April, 11

17-04-11 (A)

12

Wardha Warora @

4

Maharashtra

Wardha Power Co. Ltd (KSK)

TH

135.00

135.00

April, 11

30-04-11 (A)

3491.00

3491.00

Sub Total IInd Quarter (July - September 2011) CENTRAL SECTOR 13 14

Chamera-III

1

H.P.

NHPC

HY

77.00

Aug,11

2

H.P.

NHPC

HY

77.00

Sep,11

15

Sipat -1 *

1

C.G.

NTPC

TH

660.00

660.00

July,11

28.06.11 (A)

16

Durgapur Steel TPS #

1

WB

DVC

TH

500.00

500.00

Aug,11

29.07.11 (A)

State Sector 17

Myntdu

2

Meghalaya

MeECL

HY

42.00

July,11

18

Harduaganj Extn #

8

UP

UPRVUNL

TH

250.00

19

Bhusawal TPS Expn #

4

Maharashtra

MSPGCL

TH

500.00

20

Santaldih TPP Extn Ph-II #

6

WB

WBPDCL

TH

250.00

21

Hazira CCPP Extn #

GT+ST

Gujarat

GSECL

GT+ST

351.00

Aug,11

22

Pragati CCGT- III #

GT-3

Delhi

PPCL

GT-3

250.00

Sep,11

250.00

Sep,11

27.09.11(A)

July,11 250.00

July,11

29.06.11(A)

Private Sector 23 24

Karcham Wangtoo

2

H.P.

JKHCL

HY

250.00

250.00

July,11

21.06.11(A)

3

H.P.

JKHCL

HY

250.00

250.00

Aug,11

08.09.11(A)

25

Jallipa-Kapurdi TPP #

3

Rajasthan

Raj West Power ltd

TH

135.00

135.00

Aug,11

02.11.11(A)

26

Anpara-C TPS #

1

UP

Lanco Anpara Power Pvt. Ltd

TH

600.00

600.00

July,11

15.11.11(A)

27

Mundra UM TPP

1

Gujarat

Tata Power Ltd

TH

800.00

28

Mundra TPP Ph-II

2

Gujarat

Adani Power Ltd

TH

660.00

660.00

5652.00

3555.00

Sub Total

COAL INSIGHTS 77 January 2012

Aug,11 Aug,11

20.07.11 (A)

Power sector update Generation capacity addition during 2011-12 (contd.)

Sl. No.

Unit Name

Unit No.

State

Company

Type

Capacity (MW) Prog.

Commissioning Schedule

Ach.

As per Prog.

Actual (A)

IIIrd Quarter (October - December 2011) CENTRAL SECTOR 29

1

J&K

NHPC

HY

11

Oct,11

30

2

J&K

NHPC

HY

11

Nov,11

3

J&K

NHPC

HY

11

Nov,11

4

J&K

NHPC

HY

11

Dec,11 Nov,11

31

Chutak

32 33

Koteshwar

3

Uttranchal

THDC

HY

100.00

34

Chamera-III

1

HP

NHPC

HY

77.00

Oct,11

1

J&K

NHPC

HY

60.00

Nov,11

35 36

Uri-II

2

J&K

NHPC

HY

60.00

37

Indra Gandhi TPP

2

Haryana

APCPL

TH

500.00

500.00

Dec,11 Nov,11

05.11.11(A)

38

Sipat -2*

1

C.G.

NTPC

TH

660.00

600.00

Nov,11

24.12.11(A)

39

Neyveli TPS Exp #

1

T.N.

NLC

TH

250.00

Oct,11

40

Bellary TPP St-II

2

Karnatka

KPCL

TH

500.00

Nov,11

41

Pragati CCGT- III ST-1 #

Delhi

PPCL

ST-1

250.00

Oct,11

State Sector ST-1

Private Sector 42 43

Budhil

1

HP

LANCO

HY

35.00

Oct,11

2

HP

LANCO

HY

35.00

Nov,11

44

Karcham Wangtoo

4

H.P.

JKHCL

HY

250.00

250.00

Oct,11

13.09.11(A)

45

JSW Ratnagiri TPP #

4

Maharashtra

JSW Energy (Ratnagiri) ltd

TH

300.00

300.00

Oct,11

08.10.11(A)

46

Anpara-C TPS #

2

UP

Lanco Anpara Power Pvt. Ltd.

TH

600.00

600.00

Oct,11

12.11.11(A)

47

Sterlite (Jharsugda)*

3

Orissa

Sterlite Energy Ltd.

TH

600.00

600.00

Oct,11

16.08.11(A)

48

Rithala CCPP

ST

Delhi

NDPL

TH

36.00

49

Khamberkhera IPP

1

Gujrat

Bajaj Energy Pvt. Ltd.

TH

45.00

50

Jallipa-KapurdiTPP #

4

Rajasthan

Raj West Power Ltd.

TH

135.00

51

Maqssodpur IPP

1

U.P.

Bajaj Energy Ltd.

TH

45.00

03.11.11(A)

52

Barkhera TPP

1

U.P.

Bajaj Energy Ltd.

TH

45.00

06.11.11(A)

53

Mundra TPP Ph-II

1

Gujrat

Adani Power ltd.

TH

660.00

07.11.11(A)

54

Khamberkhera IPP

2

U.P.

Bajaj Energy Pvt. Ltd.

Th

45.00

28.11.11(A)

55

Kasaipalli

1

C.G.

ACB India Ltd.

TH

135.00

13.12.11(A)

56

SVL

1

C.G.

SV Power Ltd.

TH

63.00

07.12.11(A)

57

Rosa

3

U.P.

Rosa Power Co. Ltd.

TH

300.00

28.12.11(A)

Sub Total

4321.00

04.09.11 (A) 17.10.11(A) Aug11

23.11.11(A)

4419.50

IVth Quarter (January - March 2012) CENTRAL SECTOR 58 59

Kudankulam

1

TN

NPC

Nucl.

1000.00

2

TN

NPC

Nucl.

1000.00

Feb12

HY

60.00

Jan,12

HY

100.00

Mar,12

60

Uri-II

3

J&K

NHPC

61

Koteshwar

4

Uttranchal

THDC

Feb,12

State Sector 62

Myntdu

3

Meghalaya

MeECL

HY

42.00

Feb,12

63

Harduaganj Extn #

9

UP

UPRVUNL

TH

250.00

Feb,12

64

Bhusawal TPS Expn

5

Maharashtra

MSPGCL

TH

500.00

Jan,12

65

Maithon RB TPP

2

Jharkhand

JV of DVC-Tata

TH

525.00

Jan,12

66

Tirora TPP Ph-1

1

Maharashtra

Adani Power Ltd.

TH

660.00

Jan,12

Private Sector

Sub Total Grand Total

4137.00

0.00

17601.00

11465.50

Note : * - 11th Plan Best effort Units; # - Units slipped from 2011-11 Target; @ - Additional Units not included in 11th Plan Target

COAL INSIGHTS 78 January 2012

Source: Central Electricity Authority

Tear along the dotted line

Tear along the dotted line

E-Auction

OFFERED BY RAIL 528,418 104,855 328,366 738,520 326,950 367,390 273,884 135,535 275,070 92,040 315,350 79,060 225,852

1,000,000 500,000 0 Apr'11

May'11

2,600,000 2,100,000 1,600,000 1,100,000 600,000 100,000 Apr'11

May'11

1,000,000 900,000 800,000 700,000

123074

400,000 300,000 200,000 100,000 0

Companies Nov-11 QTY OFFERED

Nov-11 QTY SOLD

Oct-11 QTY OFFERED

Oct-11 QTY SOLD

Companywise data of sold quantity through coaljunction in Nov ’11 (Road & Rail) 1000000 900000 800000 700000

Quantity (in Tons)

Grand Total 171759 300320 201874 523100 81000 152766 975000 485200 2891019

600,000 500,000

CCL RAIL

-18.29% -62.50% NA NA NA NA NA NA NA NA NA NA NA NA NA NA 89.38% NA 649.15%

Nov'11

CCL ROAD

-5.88% 45.00% NA NA NA NA NA NA NA NA NA NA NA NA NA NA 73.07% NA 459.11%

Oct'11

SCCL RAIL

195,700 31,624 158,580 385,904

WCL RAIL

311,000 79,060 201,850 591,910

Sept'11

SOLD QTY (in tons)

SCCL ROAD

159,900 11,859 523,100 81,000 975,000 90,659 111,215 485,200 152,766 300,320 2,891,019

Aug'11

ECL RAIL

292,700 114,637 612,000 81,000 980,000 118,882 111,215 488,650 161,000 349,350 3,309,434

July'11

Companywise quantity offered & sold through coaljunction In Nov ’11 vs Oct ’11

MCL RAIL

SOLD QTY

NCL ROAD

OFFERED QTY

MCL ROAD

QTY SOLD

June'11

OFFERED QTY (in tons)

BCCL RAIL

QTY OFFERED

111215

OFFERED BY RAIL

3,100,000

BCCL ROAD

QTY SOLD

ROAD 159900 300320 90659 523100 81000 152766 975000 485200 2767945

Nov'11

Quantity offered & sold through coaljunction

Variation (In Percent)

QTY OFFERED

RAIL 11859

Oct'11

3,600,000

Companywise data of sold quantity through Qty. In Tons coaljunction in Nov ’11 (Road & Rail) Client BCCL CCL ECL MCL NCL SCCL SECL WCL Grand Total

Sept'11

WCL ROAD

Variation (In Percent) -22.81 -40.00 -21.42 -21.26 -23.63 -23.11 -17.96 -29.94 -10.22 -19.17 -14.53 -34.80 -12.64

Quantity In Tons

BCCL ROAD BCCL RAIL MCL ROAD MCL RAIL NCL ROAD NCL RAIL NEC ROAD NEC RAIL SECL ROAD SECL RAIL ECL ROAD ECL RAIL WCL ROAD WCL RAIL SCCL ROAD SCCL RAIL CCL ROAD CCL RAIL TOTAL

Aug'11

OFFERED BY ROAD

Qty. In Tons Oct-11

July'11

Qty. In Tons

Companywise quantity offered & sold through coaljunction in Nov ’11 vs Oct ’11 via Rail & Road Nov-11

June'11

ECL ROAD

SOLD QTY (in tons) 2,411,545 700,055 2,608,551 2,805,310 2,481,981 2,179,060 2,328,720 1,303,176 2,255,313 1,764,911 2,203,438 385,904 2,891,019

1,500,000

SECL RAIL

OFFERED QTY (in tons) 3,124,026 1,166,696 3,319,686 3,562,770 3,249,800 2,834,160 2,838,672 1,860,004 2,512,015 2,183,370 2,578,082 591,910 3,309,434

2,000,000

NEC RAIL

MONTH Nov'10 Dec'10 Jan'11 Feb'11 Mar'11 Apr'11 May'11 June'11 July'11 Aug'11 Sept'11 Oct'11 Nov'11

2,500,000

SECL ROAD

Monthwise quantity offered & sold through coaljunction e-Auction

3,000,000

NCL RAIL

OFFERED BY ROAD 2,595,608 595,200 2,991,320 2,824,250 2,922,850 2,466,770 2,564,788 1,724,469 2,236,945 2,091,330 2,262,732 512,850 3,083,582

Qty Offered In Tons

MONTH

Monthly data of offered quantity through coaljunction (Road & Rail)

3,500,000

Quantity in Tons

Nov'10 Dec'10 Jan'11 Feb'11 Mar'11 Apr'11 May'11 June'11 July'11 Aug'11 Sept'11 Oct'11 Nov'11

Qty. In Tons

NEC ROAD

Monthly data of offered quantity through coaljunction (Road & Rail)

600000 500000 400000 300000 200000 100000 0

COAL INSIGHTS 80 January 2012

BCCL

CCL

ECL

MCL

NCL RAIL

ROAD

SCCL

SECL

WCL

port Data Major Ports Through Which Coking Coal Arrived in India Sept-Nov ‘11 Port

VIZAG PARADIP KOLKATA MORMUGAO MUNDRA KANDLA CHENNAI

Qty (in Tons) 2574450 1294727 1139966 1124590 369859 77023 51484

Grand Total

6632098

Major Ports Through Which Coking Coal Arrived In India - September-November ‘11 1% 1%

6%

Major Coking Coal Supplier Countries To India (Through Mentioned Ports) Sept-Nov ‘11 Country of Origin

Qty (in Tons)

AUSTRALIA

5803318

USA

289365

NEW ZEALAND

279352

SOUTH AFRICA

221364

OTHERS

38699

Grand Total

6632098

Major Coking Coal Supplier Countries To India (Through Mentioned Ports) - Sept-Nov ‘11 4% 3%

17%

1%

4%

38%

17% 88%

20% VIZAG

PARADIP

KOLKATA

MORMUGAO

MUNDRA

KANDLA

AUSTRALIA

CHENNAI

Major Ports Through Which Steam Coal Arrived in India Sept-Nov ‘11

USA

NEW ZEALAND

SOUTH AFRICA

OTHERS

Major Steam Coal Supplier Countries To India (Through Mentioned Ports) Sept-Nov ‘11

Qty (in Tons)

KOLKATA

771301

MUNDRA

2505572

PARADIP

714803

INDONESIA

7657529

VIZAG

1932780

CHENNAI

481515

SOUTH AFRICA

1453806

KANDLA

1062822

OTHERS

703688

AUSTRALIA

107289

MUMBAI

1046143

Grand Total

9218624

Grand Total

9218624

Port

Major Ports Through Which Steam Coal Arrived In 8% India (Through Mentioned Ports) Sept-Nov ‘11 5% 8%

8%

Country of Origin

Major Steam Coal Supplier Countries To India (Through Mentioned Ports) Sept-Nov ‘11

27%

5% 8%

Qty (in Tons)

16%

1%

27%

8%

8% 11%

21%

11%

12% MUNDRA

VIZAG

KANDLA

MUMBAI

21% KOLKATA

PARADIP

CHENNAI

OTHERS

CHENNAI

OTHERS

83%

12% MUNDRA

VIZAG

KANDLA

MUMBAI

KOLKATA

PARADIP

INDONESIA

SOUTH AFRICA

AUSTRALIA

Note: Name of importers for coal and coke will be provided on request. Figures are based on consignment lifted from these ports for which price details/break-up is available with Coal Insights team

COAL INSIGHTS 82 January 2012