Ccai newsletter feb 18 by Sheikh Murad

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Vol. XLVI No. 11 Published on : 28.02.2018

CCAI Monthly Newsletter February 2018

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From the Editorâ&#x20AC;&#x2122;s Desk Though the production of Coal India Limited has reached near to the production of the same month last year, it has failed to meet the actual target in February. Coal stock position to the thermal power plants is said to be critical again. There is huge pendency of rakes to the Non-power sector as well. Coal Ministry has come out with a permanent solution to increase the coal stock at power plants by acquiring enough railway rakes to transport coal without waiting for the railways to make the container trains available to it. This move would also attract the foreign investors as well. As domestic output fails to match demand, the country is set to see a rise in shipments of the fuel. To boost domestic production and cut imports, the Union Government may start forward auctions soon to select developers for commercial coal blocks. The auction process will be transparent like in the case of captive coal blocks and will be based on the amount consumers agree to pay as auction fees per tonne. There will be no end-use or pricing restrictions on the commercial coal blocks. This move would reduce fears of new power plants that were unsure of getting fuel supplies in a no PPA scenario as they can now contract with commercial coal suppliers to revive their projects & sustain operations. Execution of the same may lead to newer business models in the energy sector and attract FDI from global companies that were waiting on the fence for coal sector privatization as well. Happy reading.........

4 | CCAI Monthly Newsletter February 2018

CCAI Monthly Newsletter Vol. XLVI No. 11 February 2018

Content 06 |Consumers’ Page

Official Organ of the Coal Consumers’ Association of India. Disseminates News and Views on Coal and all other sources of Energy.

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MO/DD to be made in favour of “Coal Consumers’ Association of India” CCAI do not necessarily share or support the views expressed in this Publication.

36 |Overall Domestic Coal Scenario 37 |Energy Genaration Report 38 |Monthly Summary of Domestic Coal 39 |Monthly Summary of Imported Coal and Petcoke

40 |Global News 42 |Production and Offtake Performance of CIL and Subsidiary Companies CCAI Monthly Newsletter February 2018

CONSUMERS’ PAGE Present Coal Scenario The production of Coal India Limited came near to 54.46 million tonnes in February 2018 compared to the same month last year but missed the target of 61.43 million tonnes. Coal offtake improved by 4 per cent to 49.97 million tonnes in February but also missed the targeted volume of 52.14 MT.

Consumers’ Concern 1. Coal Stock Position Power sector seems to be facing coal shortage again as 46 coal-fired power plants reported stocks of less than a week. Coal supplies have not improved since the monsoon season last year when some of the coalfired power plants had faced acute shortage. Though power, coal and railway ministries had taken a series of measures to improve coal supplies to power plants, there are 12 non-pithead power plants which are facing super critical coal stock situation. 2. Huge pendency of rakes This has been gathered from our member companies that number of rakes are getting lapsed mainly for power sector till the end of February, 2018. There is also arrear of more than 5000 rakes in the non lapsable category during the same period from different CIL Subsidiaries which is creating temporary stalemate in smooth functioning of the plants. 3. Delay in issuance of credit notes against GCV slippage In case of GCV slippage from different subsidiaries, inordinate delay in issuance of credit note is resulting in stuck up of funds. Therefore, coal consumers are requesting Subsidiary Coal Companies for timely release of credit notes as it is done in case of debit notes. 4. CHP or SILO loading For ensuring timebound efficient loading of coal, both Power and Non-power Sectors have requested CIL & Subsidiaries for loading through Silo or rapid loading mechanism. Advanced Coal Handling Plants (CHP) should be put in place. 5. Third Party Sampling and Analysis for all consumers Third Party Sampling and Analysis facility will be provided to the consumers across the board from 1st April, 2018. Large section of consumers were deprived of this facility which would be beneficial if execution is smooth and timely at the Subsidiary level. 6. Request to conclude FSAs by offering Secondary Source in absence of allotted grade at primary source In absence of required quantity from the primary source in Tranche III, Subsidiaries should expedite the conclusion of FSAs considering the secondary source.

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7. GCV slippage repeatedly found Power Consumers are repeatedly complaining of GCV slippage from different areas of ECL and BCCL. In spite of Third Party Sampling & Analysis, consumers are not satisfied with the quality specially from these two Subsidiary Coal Companies resulting in loss to the Power Plants. 8. Request for increase in Quantity by Rail in Linkage Auction Tranche IV Huge number of old FSAs from Non-power Sector would expire in 2018 from April onwards and there is also long pendency of rakes from different Subsidiaries of CIL. Therefore, consumers have urged for increase offer by Rail in Tranche IV Auction of Linkage for Non-power Sector. 9. Consumer alleges imported Indonesian coal is cheaper than pithead price of coal of certain mines of WCL According to a reputed industry consumer, certain varieties of WCL coal supplied to industries are costlier than imported Indonesian coal of some grades (GCV). 10. Adjustment of DMF from 12.01.2015 to 20.10.2015 for Coal Mining Companies Consumers lifting coal from Madhya Pradesh have been directed to deposit VAT/CST/Entry Tax/MP Tax/ Excise Duty on DMF amount by Western Coalfields Limited (WCL) vide notification no NGP/WCL/S&M/ Comml/1021 dated 06.12.2017. Consumers have requested to withdraw the notification as the principal demand does not exist. 11. Refund of CST While depositing payment for coal value, consumers deposited CST @ 5% instead of CST @ 2% against C-Form at requisite Quarter-end. The refund against C-Form transactions is not released in time. However, till date many consumers in spite of their depositing ‘C’ form in time have not received refund of excess CST amount deposited by them.

POWER Intra-state network constraints affecting power supply in India: Power Secretary A K Bhalla India is a power surplus country but electricity does not reach all regions due to network constraints in some states, a senior official said. “The installed power generation capacity is 330 GW. The available power is 220 GW. The peak rated requirement is about 155 GW. In term of power capacity and requirement, yes (India is a power surplus country),” Power Secretary A K Bhalla said during a panel discussion here when asked whether it is an illusion that India is a power surplus state. “But why it is an illusion...because power is to reach where it is needed...there is sufficient increase in inter-state power transmission capacity. Transmission within the states (intra-state) is where major issues come up. Some of the states’ power carrying capacity is limited,” he said. Elaborating on the matter, he said, “Surplus power is available nationally but we cannot carry that to all the places with circuit constraints with these states. These are the constraints which lead to power cuts and other shortages of power in localised areas.”

Spot power bills soar on coal auction price rise Spot power prices in India have increased almost a rupee per unit since April last year mainly because of higher e-auction price of coal. Prices at e-auctions rose almost 16% while spot power rates increased 18% in the first nine months of the current fiscal. Coal India sold 18% more coal at the auctions. Many independent power producers buy coal auctioned by Coal India, and their generation cost depends on the price at the e-auction. “As coal prices are on the rise, they are quoting higher prices for the power they intend to sell,” said Rajesh K Mediratta, director-business development at Indian Energy Exchange.

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A senior Coal India executive said average auction prices in April-December 2017 was Rs 1,738 per tonne while in the last three months of the same period it was Rs 1,998 per tonne. It rose further to Rs 2,089 in January.

India to be dominant source of energy growth from 2030: BP India and China, with about like 2.5 billion people, that’s around a third of the world’s current population is currently responsible for the energy growth and the growing prosperity drives increase the growth in energy demand, and that’s what’s driving the growth,” Dale said. India will bypass China as the driver in global energy growth by 2030, a top official of BP said. “As the pattern of growth within China shifts — slower economic growth and less intensive energy growth — the baton is passing to India as the dominant source of energy growth,” Spencer Dale, chief economist BP, told a Washington audience. He said currently China and India account for around half of the world’s energy. “India and China, with about like 2.5 billion people, that’s around a third of the world’s current population is currently responsible for the energy growth and the growing prosperity drives increase the growth in energy demand, and that’s what’s driving the growth,” Dale said.

Power generation rises 5.8% in January In what could be seen as a silver lining for the power sector, generation from conventional sources went up by 5.8% year-on-year in January to 101.1 billion units (BU). Since electricity cannot be stored, generation is the most robust indicator of demand. At 158.5 GW, peak demand for electricity in the first month of 2018 was 6.9% higher than the corresponding month the previous year. The peak demand in the ongoing financial year has been 164 GW, against current installed power capacity (including

renewables) of 334 GW. For the first 10 months of FY18, the overall thermal generation went up by 4.1% to 1,003.1 BU. The plant load factor (PLF) at coal-based power plants was 62.5% in January, more than two percentage points higher than the same month last year. However, although PLFs for government-run power plants improved, the same for private power plants slipped further to less than 55%. There was power supply shortage of 1.1% during the hours when electricity demand was the highest (peak deficit) in January. Rajasthan recorded a peak shortage of 158 MW (1.3%), second only to J&K at 580 MW (20%). The all-India peak deficit was 2% for the April-January period.

Coal-fired power plants to run at 60% capacity utilisation in 2019 Capacity utilisation of coal-fired power plants are expected to hover between 60 percent and 62 percent in 2018-19 because of large capacity additions in the past five years, feels India Ratings and Research (IndRa). Capacity utilisation of coal-based thermal power plants are unlikely to fall below 60 percent in FY19, even under a blue-sky scenario where in solar addition increases to 18 gigawatts (GW) annually while a new coal-based capacity of 8 GW is added. However, coal-based thermal power plants operating below 60 percent PLFs would continue to face challenges in

meeting their debt service obligations. The agency has maintained a stable outlook on most of its rated power sector entities for FY19, as it expects the entities would continue to manage fuel and counterparty risks due to a favourable tariff mechanism, a comfortable liquidity position and support from central and state governments.

India to catalyze Bangladesh-Nepal bilateral power tie up Indian land between Bangladesh and Nepal is going to be the conduit for the two friendly international neighbors to have large scale hydropower trade in between. Bangladesh will have hydropower plants installed in Nepal and import the output through Indian land soon. “Interest of Bangladesh to invest in harnessing untapped hydro potential of Nepal is going to put both the countries into a win win situation. India is playing the positive role of catalyst in it,” President, Rangpur Chamber of Commerce and Industry (RCCI) Mostofa Sohrab Chowdhury told. RCCI is one of the largest Business and trade community platforms of Bangladesh. Following expression of interest from Bangladesh to invest in Nepal’s hydropower sector couple of months back, Nepal submitted a list of seven possible projects. “Our Government is considering them,” said Chowdhury.

CCAI Monthly Newsletter February 2018

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Coal India target for power sec- Thermal power plants under tor pegged at 513 mn tonnes for stress on rising coal, freight costs next fiscal Coal-based power plants are feeling the heat of spike Coal India will supply 513 million tonnes of coal and offer 12 million tonnes more via e-auction to the power sector in 2018-19 (FY19). The remaining 90 million tonnes of the sector’s demand will come from Singareni Collieries and captive coal blocks, Coal India executives said. After facing a deficit in the last quarter, the power ministry has asked Coal India and Indian Railways to ensure a supply of 615 million tonnes annually, with 288 rakes moving every day. The deficit, according to the ministry, had led to a shortage of power generation. To ensure the smooth movement of 288 rakes every day, Coal India has drawn up a plan of how much coal would be provided by which company. Of Coal India’s eight subsidiaries, Mahanadi Coalfields would load the highest number of rakes (76) per day. South Eastern Coalfields would occupy the second spot, loading 57 rakes. These decisions were taken at a recent meeting chaired by Minister of State for Power and New and Renewable Energy R K Singh. Representatives of the ministries of power and railways, NTPC, and Coal India attended the meeting.

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in thermal grade coal prices and railway freight costs. Prices of thermal grade coal since the last notification by Coal India on January 9 this year have moved up by 15-18 per cent. This apart, the levy of evacuation charge of Rs 50 per tonne is estimated to increase the cost of generation for coal-based power plants by 13-15 paise per unit. Also, the Ministry of Railways through a notification on January 9 this year has rationalized the freight rates for coal transportation and withdrawing the levy of busy season surcharge (15 per cent) and development surcharge (five per cent) on coal transportation. The busy season surcharge is levied from April to June and October to March in a financial year. On an annual basis, the freight rates have been revised by 3.4-3.6 per cent across various distance slabs. According to a report by Icra, the impact of this freight revision on the cost of generation for thermal plants could be two to four paise per unit depending on the distance of the project from the associated coal mine.”Thermal power plants are already operating at lower load due to rising demand for renewable power.

Need to unlock power demand in the country: Minister The excess power generation in the country is an aberration given that a large part of the country is yet to get connected to electricity supplies, said RK Singh, Minister of State (Independent Charge) for Power and New and Renewable Energy. Speaking at Indian Power Stations conference, he said, “If you look at the entire power sector, the demand has been suppressed because not everyone is connected.” The spurt in power demand will lead to an increase in coal demand for which the country needs to be prepared. “The unlocking of demand will come but with some constraints. We don’t have a shortage of coal but we need to put in place mechanisms to get coal from underground to over ground and then to the power stations,” said Singh.

India explores “cheap power” sales to neighbours India is exploring selling “cheap power” to its South Asian neighbours and Myanmar on a long-term basis and wants state utility NTPC to expand overseas, its power minister said. Indian companies such as Reliance Power Ltd and Adani Power Ltd have already signed agreements to supply power to Bangladesh, where New Delhi is fighting for influence with China. India also sells some electricity to Nepal and Myanmar, but power minister R.K. Singh said it could sell more. The ministry would look at sending teams to those countries to assess demand for power imports, he said. Singh urged India’s top utility NTPC to set up power plants in other countries and “become the world’s largest power producer”, but did not say where it should expand. .

Shortage of coal caused power generation loss in 2017-18, acknowledges govt Acknowledging that coal shortage hit power generation in the current year, and that coal supply still was a sore point, the power ministry has said that the sec-

tor would need 615 million tonnes of coal supply in the coming financial year. This would also entail an increased demand of railway rakes of 288 per day to meet the demand. In an inter-departmental meeting of power, coal, railways, along with NTPC and Coal India, held in January, Power Minister R K Singh said efforts should be made to ensure that there was no shortage of coal during the next monsoon season. To meet the same and speed up the operations, Coal India would now look at the loading rakes beyond stipulated time and aim for round the clock operations. “CIL assured to load a rake within 5 hours as per existing free loading time from the sidings with loading facility of fewer than 4 rakes/day. It will load a rake within 3 hours from the sidings with more than 4 rakes/day capacity,” said the minutes.

Government takes steps to boost coal supplies to power plants In order to boost coal supplies to power plants, the government has decided on various steps including the use of dedicated rail transportation and setting up of power projects only within 500 km from coal mines, sources said. It has also decided that all power plants within 20 km from pit-head of coal mine will construct elevated closed belt conveyors within next 2 years. The steps were finalised at a meeting headed by Power Minister R K Singh, said a source. The meeting was held in the last week of January and the steps were firmed up in the presence of power secretary, coal secretary, chairman of the Central Electricity Authority, CIL’s chairman and managing director and CMD of NTPC. As per the estimates on the basis of power consumption growth, the requirement of domestic coal in 2018-19 would be about 615 million tonnes, which means that 288 rakes of coal per day would be required from Coal India Ltd (CIL), said the source. According to him, as per the steps decided, plants within 40 km from pithead are mandated to construct MGR system within 3 years. The MGR or merry-goround is a closed-circuit dedicated rail transportation system between the production and consumption points.

CCAI Monthly Newsletter February 2018

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Cabinet to vet Rs 48K crore KU- port: ETC SUM scheme for solar power by Energy Transition Committee (ETC), in a report last year suggested India not to make any new investMarch Rs 48,000-crore KUSUM scheme to promote the use of solar power among farmers would be placed before the Cabinet by next month, New and Renewable Energy Minister R K Singh said. KUSUM (Kisan Urja Suraksha Evam Utthaan Mahaabhiyan) aims to incentivise farmers to run solar farm water pumps and use barren land for generating solar power to have extra income. The total cost of the capacities under this scheme would be Rs 1.4 lakh crore. The Centre will provide Rs 48,000 crore financial assistance under the scheme. The new scheme would be more broad-based like incentives for discoms to buy power from farmers and financial assistance of 60 per cent to buy solar pumps. which would be equally shared by the Centre and state.

ment in the coal sector. ETC is now willing to work with policymakers and redesign policies, which traditionally have been ‘coal-centric’. “We are arguing that if you are building a completely new energy system, it can be fully renewable in the coming 20-25 years,” told Lord Adair Turner, chairman, ETC told. ETC is launching two major initiatives this year, one is de-carbonising core infrastructure sectors globally and other is to take the vision of transition to renewable in India, said Turner.ETC is a diverse international group that has members across the energy landscape. It was convened to help identify pathways for change in energy systems to ensure both better growth and a better climate. This is inspired by the work of the New Climate Economy. Turner said this year ETC would introduce India chapter. ETC has collaborated with TERI in India to publish the report, which focuses on de-carbonisation of core manufacturing sectors such as steel, thermal power, manufacturing, automobiles etc and also suggest a transition in the Indian electricity space.”

Govt extends transmission charge waiver for solar, wind Renewable energy poses threat power till 2022 to coal’s future: CIL The government has extended the waiver of inter-state power transmission charges and losses for the solar and wind power projects commissioned till March 31, 2022, with a view to giving a boost to clean energy sources. Earlier, the waiver was available to solar and wind power projects commissioned till December 31, 2019, and March 31, 2019, respectively. The waiver will be available to these projects for 25 years from the date of commissioning provided the developers sign power purchase agreements with entities, including discoms, for sale of power for compliance of their renewable purchase obligation, the order said. The order also provides that the waiver would be available to only those projects which are awarded through competitive bidding process according to the guidelines issued by the central government. Thus, other entities procuring clean energy from these projects were at a disadvantageous position. Now they can also avail the benefit.

India’s transition to renewable would need strong policy sup12 | CCAI Monthly Newsletter February 2018

Renewable energy will start replacing coal-fired power as solar tariffs are poised to fall below Rs 2 per unit in seven years and storage costs fall, while cheaper international supply can lead to imports of 20 million tonnes, posing a big challenge to domestic suppliers, a document issued by Coal India says. The competitiveness of domestic supplies will be a challenge as costs such as wages rise, according to the document prepared with the help of a consultant hired by the monopoly to assess the future of coal in the era of plunging renewable energy costs and rising concerns about polluting fossil fuels such as coal. The report, on which Coal India is seeking public comments, says that unless costly mines are retired and prices of coal corrected downwards, domestic supply may remain stagnant or even fall.

CCAI Monthly Newsletter February 2018

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DOMESTIC Coal imports to rise as India grapples with train shortage, surging demand. Caught between logistical bottlenecks and surging demand from power plants, India will likely increase coal imports in 2018, industry executives said, in what would be a setback to the government’s plans to cut the country’s dependence on foreign supplies. The projected higher coal demand, which would reverse two years of declines, will be a boon for international miners such as Indonesia’s Adaro Energy, Australia’s Whitehaven Coal or global commodity merchant Glencore. But, the country’s power plants and cement makers, the source of the resurgent demand, will end up eating the cost of the higher-priced imports. India’s thermal coal imports may rise as much as 4 percent this year, with a steady 3 percent to 5 percent of growth expected over the next five years, a senior executive at Adani Enterprises, the country’s biggest coal trader, told .

Govt in future may auction coal mines only for commercial use: Coal Secretary. The government may in near future scrap the present system of allocating coal mines for captive use and instead only auction mines for commercial use to private as well as foreign companies with a view to boost domestic production and cut imports, a top official said. The move, which would not just help attract foreign investment but also bring in efficiency and promote competition, follows government’s decision of opening up the coal sector to commercial mining by private entities. This will be another experience of commercial mining auctions. So we will see and compare whatever is better for the country in the longer term,” Coal

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Secretary Susheel Kumar told. The Cabinet had last week approved auctioning of coal mines to any firm bidding the highest per tonne price. The secretary said the government is evaluating whether it is advisable to go for end-use restrictions.”There is an idea floated by few people which we are examining whether it is advisable to go for end-use restrictions because that is a half-hearted reform. It is not a full-fledged reform. Commercial mining is a full-fledged reform so that is something which we are evaluating and whatever is in the best interest of the country will be done,” Kumar explained.

Breakthrough on coal: Need low royalty and fast clearances to benefit from new policy When the government came out with a new coal auctions policy after, in 2014, the Supreme Court cancelled all coal licences on grounds of there being no objective criterion for their award, most expected commercial mining to be allowed. Instead, the government allowed private miners, but only on an actual user basis—that is, a steel manufacturer could be given a coal mine, but not a merchant miner. The policy made little sense since, the world over, there are big mining firms that do not produce metals—indeed, since these specialist firms are more efficient, this would have kept prices low; the government, at that time had argued that commercial miners must not be allowed while there was a shortage of coal since that would jack up prices. Within a decade of selling the public sector Hindustan Zinc to Anil Agarwal’s Vedanta, the firm’s production rose from 1.5 lakh tonnes to 1.2 million tonnes and its reserves from a few years of production to over 30 years. And within a few years of Rio Tinto mining for diamonds in Madhya Pradesh, it found more potential diamond-bearing sites than PSU miners had found in decades. Which is why, the government’s decision to finally open up coal mining

to commercial miners has to be lauded. This is a sector that has a lot of export potential, can boost local production of important metals and has the potential to create millions of jobs. RAILWAY

Union Mines Ministry’s support. We look forward to the support from the Centre to facilitate the process,” he said while speaking on the potential of the mining sector in boosting Telangana, which is rich in mineral resources such as iron ore, coal, limestone, granite and other major and minor minerals.”

India’s coal imports set to rise as No worry on fiscal situation: Jaitdomestic output fails to match ley demand Finance Minister Arun Jaitley said the fiscal situation India, the world’s second-largest coal importer, is set to see a rise in shipments of the fuel as domestic production lags behind demand, Benjamin Sporton, Chief Executive at the World Coal Association said. State-run Coal India Ltd., which produces more than 80 per cent of India’s coal, is failing to meet production targets, creating a gap that will be met through imports, Sporton said in New Delhi last week. The Kolkata-based miner has missed shipment targets every year since at least 2010. It has focused on supplies to power stations, while curtailing shipments to buyers including cement and aluminum companies. At the same time, India’s electricity demand grew 6 percent from a year ago in the first ten months of the year ending March 31, double the growth achieved in the same period a year ago. “Coal India is not quite keeping up to the targets,” Sporton said. “On the other hand, we’re seeing a strong growth in power demand.” Delays in land purchases and growing environmental awareness are some of the key challenges Coal India may encounter in increasing output, he said.

Telangana readies 3 limestone blocks for auction, to pursue steel plant The Telangana Mining Department has readied three limestone blocks in Suryapet to offer them for auction. KT Rama Rao, State Minister for Industries, IT, Mines and Geology, said, “The State government has managed to get three limestone blocks ready for auction in a record three months time. This is a not an easy task given the challenges in the mining sector. These blocks have been identified in the Suryapet district of the State after a detailed exploration process.” Limestone is a major ingredient for cement manufacturing plants and for building materials. “This would not have been possible without the the

should be comfortable next financial year and there are no worries at the moment regarding slippages in meeting the deficit targets. Brushing aside any immediate need to worry about rising global oil prices, Jaitley said an assessment should not be made based on hypothetical situation concerning crude prices as the trend in the last three days has been opposite (with prices falling again. Jaitley, who also met the board of Sebi earlier said one of the factors that stood out from the capital market regulator’s presentation is that there is an increased reliance on corporate bonds as far as credit is concerned. RBI governor Urjit Patel said the equity-debt ratio for corporates is expected to get better going forward as the capital markets have shown a good trend in terms of raising funds through bonds.

Coal India Q3 net profit up by 4 per cent State-run miner Coal India Ltd (CIL) reported a 4.21 per cent increase in its consolidated net profit at Rs 3,004.79 crore for the quarter ended December 2017. The company had posted a net profit of Rs 2,883.27 crore during the October-December quarter of the previous fiscal, CIL said in a regulatory filing. Total income during the quarter under review stood at Rs 22,484.14 crore. It was Rs 23,064.65 crore in the corresponding period of the last fiscal. CIL said, revenue for the quarter is not comparable with the year-ago period on account of GST implementation from July 1, 2017. Production during the quarter stood at 152.04 million tons as against 147.73 million tons in the year-ago period. Total expenses during the quarter under review stood at Rs 17,873.93 crore compared to Rs 18,907.17 crore in the same period of the previous fiscal. On standalone basis, net profit during the period was Rs 121.14 crore as against a loss of Rs 39.03 crore a year ago. CCAI Monthly Newsletter February 2018

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CEMENT Cement hits rough patch The cement industry is likely to see tepid capacity utilisation in the medium-term because of moderate demand, though affordable housing is expected to have a positive impact. While some of the companies have reported robust growth in volumes in the fourth quarter of 2017, they have done so on a low base in the same period last year because of demonetisation, analysts said. According to a note from credit rating agency ICRA, demand has continued to remain weak because of weak real-estate activity, sand shortage and problems related to the GST. Offtake continued to be weak in the first 8 months of the fiscal, just a marginal increase of 0.5 per cent in November 2017 ,on a month-on-month basis, at 24.1 million tonnes (mt). “Based on the current trend, cement demand is likely to report a modest growth of around 2 per cent in 2017-18. Though cement demand registered a year-on-year growth of 17.3 per cent in November 2017, this was primarily due to the base effect arising out of low production of 20.5mt in November 2016, the month when demonetisation was announced,’’ Icra said. Sabyasachi Majumdar, senior vice-president and group head, Icra Ratings, said demand growth was likely to be driven by a pick-up in housing - particularly affordable and rural housing, and infrastructure segments - and road and irrigation projects. However, new project announcements from the private sector continue to remain weak.

STEEL Higher growth in steel consumption likely in 2018 A look at the major performance indicators of global steel industry in 2017 signals a definite trend in what is in store for the current year. While global production of crude steel at 1,691 million tonne (MT) clocks a growth of 5.3% in 2017 over the previous year, the estimated steel consumption has risen to 1,622 MT in the last year. Thus, 2018 has begun with a positive note which was not the case a year ago when

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excess capacity in global steel market was identified as a major constraint plaguing the industry in the backdrop of a subdued business scenario. The global steel forum apart from OECD steel committee had intensely deliberated the ways and means of eliminating excess capacity and in this respect China was the major target. The ministry for environment protection had earlier identified 29 steel units for closure and now has restricted production to 50% for all those units which exhibit various levels of shortfall in attaining the pollution norms. It also eliminated around 50-100 MT of induction furnace capacity that was not a part of the regular production figures reported by the country. As these producers were mainly producing long products (re bars, light structural), the capacity closure helped the big players to capitalise the local shortage of the long products to get a higher

India’s finished steel export slides over 30% in January India’s export of finished steel shrank by over 30 per cent to 0.616 million tonnes (MT) during January 2018, according to the government’s Joint Plant Committee (JPC).

The country had exported 0.890 MT of finished steel during the same month a year ago. Exports should account for 6-7 per cent of Indiaa s total steel production in the next few years, up from the 1.5 per cent at present, Union Steel Minister Chaudhary Birender Singh had earlier said. The import of finished steel too fell by 44.5 per cent to 0.335 MT in January 2018 from 0.604 MT during January 2017. In spite of a drop in exports number as well as imports, India managed to maintain its position as a net exporter of finished steel. “India was a net exporter of total finished steel in January 2018 as also during April-January 2017-18,” the JPC said.

RAILWAY CIL to have own railway rakes to transport coal With coal shortage at power stations leading to generation losses at frequent intervals (in January, staterun NTPC had complained to the power ministry about critical fuel shortage at four of its plants), the government has come out with a permanent solution to the issue: Coal India will, over the next five years, acquire enough railway rakes to transport coal to all thermal power stations in the country, without having to wait for the railways to make the container trains available to it. Currently, around 260 rakes a day are used by CIL for coal transportation, all on rent. It is estimated that CIL would need 288 rakes a day to meet the country’s electricity generation targets in 2018-19. CIL pays the railways Rs 35,000 crore annually as freight, a cost borne finally by its consumers. Once the rakes are owned by the company, the freight bill will reduce drastically as only track rents will need to be paid to the national transporter. Shortage of railway rakes for coal transportation has been one of the major reasons behind the supply shortage. In order to improve supply of coal to power plants, the government had earlier asked electricity generation units located within 60 km from the mines to build covered conveyor belt systems for coal transportation.

Piyush Goyal assures simpler railway procurement process Railway and Coal Minister Piyush Goyal on spoke about making procurement process in the Railways simpler and effective. He also informed about age relaxation and other changes made in the recruitment process. “There are many issues related to approval process and speed of approval in Railways, which all are being looked at holistically by the government to make them more robust and simpler,” Goyal said while addressing a press conference at Suppliers Samvad in New Delhi. “Railways will give a letter of credit to companies which supply goods worth more than Rs 10 lakh. We are planning to make procurement process much simpler and effective, giving us far more competitive prices and expanding the supplier base of the Railways,” he added. Further pointing out at the railway recruitment, Goyal noted, “Railways has decided for this exam, there is no insistence on ITI or NTC qualification for the entire group D, we are reverting back to the criteria which were existing earlier”.

Railways to pay lease rental for CIL-owned wagons The revived plan of Coal India (CIL) to buy railway wagons to transport fuel is likely to see the transporter pay the miner lease rental for the rolling stock, similar to the arrangement the Indian Railways has with its arm Indian Railway Finance Corporation (IRFC). According to officials, an entirely new financing model will be on offer, compared with the terms agreed upon through a memorandum of understanding (MoU) between the railway and coal ministries in 2015. IRFC procures wagons and coaches and leases those to railways against rentals. The same model is likely to be adopted by the transporter for CIL’s investment. “CIL will buy wagons which will be operated by the railways and a lease rental will be paid to CIL. So instead of IRFC financing wagons, CIL will finance them,” said an official. Freight earnings, the mainstay of the transporter’s revenue, of railways will not be affected under the new system, as they are paid by final consumers of coal. At present, CIL uses 260 rakes a day for transportation of coal and it is estimated that it would require 288 rakes a day to meet the country’s electricity generation targets in 2018-19. CCAI Monthly Newsletter February 2018

| 17

With Best Compliments From:

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GLOBAL Government told to carefully de- and US decline cide on domestic coal price Demand for coal in developing Asian countries will The Indonesian Geological Experts Association (IAGI) has urged the government to not hurriedly decide on domestic coal prices under the domestic market obligation (DMO) as a mechanism to help curb electricity rates, as demanded by state-owned electricity company PLN. IAGI chairman Singgih Widagdo said the separation of domestic and international coal prices was related to the country’s long-term energy vision. He added that the decision on the coal DMO should include the Energy and Mineral Resources Ministry, the Finance Ministry and regional administrations, as well as coal investors.

offset a decline in Europe and the U.S., enabling the industry to continue growing, according to the head of the World Coal Association. A number of Asian countries, including China, the world’s largest coal consumer, are increasingly turning to gas and renewables. But coal will remain a major energy source in the region due to its cost competitiveness and efficiency, said Benjamin Sporton, chief executive of the association. “The center of the coal world is shifting toward Asia,” said Sporton, adding that this would help keep global demand on a growth track for several decades, albeit by “marginal” amounts. World Coal Association Chief Executive Benjamin Sporton talks to the Nikkei Asian Review on Feb. 21.

Israel to eliminate use of coal, gasoline, diesel by 2030 Europeans rip Trump on climate Israel’s energy minister said this week that the coun- change, import record amounts try aims to eliminate the use of coal, gasoline and of U.S. coal diesel by 2030. Speaking at an energy conference in Tel Aviv, Energy Minister Yuval Steinitzsaid at an energy conference in Tel Aviv that the country’s manufacturing and transportation industries will be fueled entirely by natural gas, electricity and alternative fuels within the next 12 years. Israel currently gets about 70 percent of its electricity from natural gas. The rest comes mainly from coal. That’s a significant difference fom just five years ago when coal accounted for more than half of Israel’s electricity.

Asian coal demand to offset EU 20 | CCAI Monthly Newsletter February 2018

As France, Germany and Italy chastised President Trump for rejecting the Paris climate accord in June and mocked the U.S. for turning its back on the environment; their nations were busy importing record amounts of American coal. The U.S., federal data show, is seeing something of a coal renaissance, but the boom — partly the result of Mr. Trump’s aggressive policies to roll back Obamaera regulations on the fuel — largely has benefited foreign markets. The U.S. last year produced 773 million short tons of coal, 45 million more than 2016. That was the largest year-to-year increase in nearly two decades,

government numbers show. But that didn’t equal increased use at home, with more coal than ever heading overseas. “Even though U.S. coal consumption decreased, higher worldwide demand for U.S. coal led to greater coal production,” the federal Energy Information Administration said in a recent report.

Coal country shouldn’t count on a Trump-fueled comeback President Trump has backed up his vow to revive coal by toppling Obama-era environmental rules, by attempting a coal rescue plan and by promising to yank the United States out of the Paris climate accord. Yet more than a year into Trump’s presidency, there remains deep pessimism in the energy industry about the chances of a coal comeback in the nearterm -- or even in the long run. A dozen coal-fired power plants are slated for closure in 2018, rivaling the record-high of 15 that shuttered in 2015, according to Bloomberg New Energy Finance. Thirty-three coal plants closed during President Obama’s second term.

The Trump administration also tried -- and failed -- to enact a plan that would have subsidized slumping coal power plants. Although the pace of coal plant closures slowed in 2017, the outlook looks bleak. .

Coal’s Continuing Decline Three signal flares went up for the American coal industry recently, all illuminating an inescapable conclusion: Despite President Trump’s campaign promise, coal-fired power is in trouble and in all likelihood won’t be reasserting itself in the United States nor should it. The first signal, from the medical community, should give champions of “beautiful, clean coal” like Mr. Trump and his energy secretary, Rick Perry, pause. A research letter published in the Journal of the American Medical Association on Feb. 6 said that health professionals in Appalachian coal country were now finding the highest levels of black lung disease in coal miners ever reported. By the late 1990s, black lung disease was “rarely identified” among miners participating in the program, researchers wrote. But a spike in cases in 2014, first reported by National Public Radio, prompted the federal agency to take a closer look at patients at three federally funded black lung clinics in southwest Virginia.

CCAI Monthly Newsletter February 2018

| 21

Adani looking for foreign coal mines amid challenges in Australia Indian resources conglomerate Adani Enterprises Ltd is looking to buy mines in countries such as Indonesia, a company executive told, despite its struggles to develop a controversial coal project in Australia. The company already owns a coal mine in Indonesia but has been unable to secure financing for the long-delayed Carmichael mine in Australia amid numerous court challenges from environmental groups concerned about climate change and potential damage to the Great Barrier Reef.

How to Make It in Coal Mining: Don’t Count on Coal If one wanted to own coal stocks, then Arch Coal Inc. is probably the right kind of coal stock to own. Why? Because it isn’t terribly bullish about coal. That’s good because coal is in its twilight years. Beset by cheap natural gas, rapidly cheapening renewable energy and growing intolerance for its emissions (of which carbon is only one), coal’s defenders have had to resort to cunning plans such as the Department of Energy’s rejected Operation Squirrel (NB: I made that name up). I think we could see rising prices in the PRB. But ... if we don’t see the market improve we’re not going to force volume into the market where we don’t want it. That said, thermal coal (that is, the stuff burned in power plants) from the Powder River Basin is about as competitive a lump as can be mined in the U.S., certainly vis-a-vis Appalachian coal.

Global thermal coal market to grow 5 percent in 2018 - Noble analyst The global thermal coal market will grow by about 48 million tonnes this year, 5 percent more than last year, the chief coal analyst at Noble Resources said, adding that imports to India will rise after falling in the last two years.

22 | CCAI Monthly Newsletter February 2018

“Current seaborne volumes require imports from swing suppliers, such as the United States,” Rodrigo Echeverri, the head of hard commodities research at Noble, told the Coaltrans India conference in Goa. Coal demand in major coal consuming countries rose and prices gained in 2017, after a downturn spanning over half a decade put many small thermal coal producers out of business.

New Cabotage Rules Could Hurt Indonesia’s Coal Ports Indonesia’s coal producers are concerned that the nation’s new cabotage rules will cut down on export volumes at its coal terminals. The Indonesian Ministry of Trade has issued a regulation requiring certain goods - including coal and crude palm oil - to be exported aboard Indonesian vessels and insured with Indonesian insurers, a measure intended to boost the nation’s shipping industry.

Coastwise cabotage restrictions exist in some form in many large economies, including existing laws in Indonesia. However, a restriction on the flag state of vessels used in international trade is rare, and the Indonesia Coal Mining Association (ICMA) says that foreign commodity traders are getting scared off by the uncertainty surrounding the new regulation. If buyers cannot guarantee that they can secure shipping capacity for their cargoes, they may not be as willing to purchase Indonesian coal, the association warns. ICMA is calling for clear technical guidance on the rules in order to clarify how they will impact trade.

Cement exports remain dismal The exports of cement continued to show dismal performance, reporting a decline of 7.82 percent from 0.38 million tons in Jan 2017 to 0.35 million tons in Jan 2018. According to the data released by All Pakistan Cement Manufacturersâ&#x20AC;&#x2122; Association (APCMA), out of

total cement despatches of 4.09m tons in Jan the domestic consumption was 3.74 million tons. Spokesman for the APCMA regretted that the government is not heeding to the requests of the industry to take steps for increasing exports and eliminating the unlawful smuggled imports of cement . He said that the industry is managing the import threat through efficient operations and low profit margins. Cement consumption in North zone was 3.02m tons and surged by 41.68 percent in Jan 2018 compared to same month last year, which lead the domestic growth. This is the second time this fiscal that cement consumption in Northern zone of the country exceeded 3 million tons. The consumption in the Southern zone of the country was also robust being 0.72 million tons. The overall increase in cement despatches was restricted to 14.94 percent due to 16.25 percent decline in cement exports .

CCAI Monthly Newsletter February 2018

| 23

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GOVERNMENT OF INDIA MINISTRY OF COAL LOK SABHA Q. No. 71. Coal Royalty. 07.02.2018 SHRI NAGENDRA KUMAR PRADHAN: Will the Minister of COAL be pleased to state: (a) whether the Government proposes to raise the royalty on coal which was due for revision in April, 2015; (b) if so, the details thereof; and (c) if not, the reasons therefor?

ANSWER MINISTER OF RAILWAYS AND COAL (SHRI PIYUSH GOYAL) (a) to (c): A statement is laid on the Table of the House. Statement referred to in reply to Lok Sabha Starred Question no. 71 for 07.02.2018

26 | CCAI Monthly Newsletter February 2018

(a) to (c) Section 9(3) of the Mines and Mineral (Development and Regulation) Act, 1957, provides that the Central Government may, by notification in the Official Gazette, amend the Second Schedule (which specifies rates of royalty) so as to enhance or reduce the rate at which royalty shall be payable in respect of any mineral with effect from such date as may be specified in the notification, provided that the Central Government shall not enhance the rate of royalty in respect of any mineral more than once during any period of three years. As such, there is no mandatory provision in the Act to revise the rates of royalty every three year. The rates of royalty on coal and lignite were last revised vide notification no G.S.R. 349(E) dated 10.05.2012. Pursuant to this notification, the rates of royalty on coal were made ad valorem on price of coal, except for the State of West Bengal. As regards revision of the rates of royalty on coal, a Study Group was constituted on 21.07.2014 for the purpose of examining the issue of revision of present royalty rates on coal and lignite. The Study Group had

earlier submitted its recommendation on 27.04.2016. However, pursuant to the change in scenario due to implementation of GST and other factors, the matter was again referred to the Study Group. The final recommendation of the Study Group is awaited.

Q. No. 696. Supply of Coal. 07.02.2018 DR. P. VENUGOPAL: Will the Minister of COAL be pleased to state: (a) whether the dispatch of coal by Coal India Limited (CIL) to its consumers in various sectors including power through road in April-October went up by 12 million tonnes, if so, the details thereof; (b) whether Coal India had also offered to supply the fuel to plants located at shorter distance by road from the available pit head stock and if so, the details thereof; (c) whether the Government had launched Grahak Sadak Koyla Vitran App in a bid to benefit customers of CIL lifting coal through road; and (d) if so, the details thereof?

ANSWER MINISTER OF RAILWAYS AND COAL (SHRI PIYUSH GOYAL) (a): Till October 2017, the movement of coal through road mode was about 93 Million Tonne (MT), which was about 29% of the total coal dispatch of 317 MT. The road dispatch during the current fiscal till October 2017 increased by more than 12 MT as compared to same period of last fiscal. In the last fiscal, till October 2016, about 81 MT of coal was dispatched through road Mode which was about 28% of the total coal dispatch by CIL. (b): In order to meet the coal requirement of power houses, different subsidiary Companies of Coal India Limited have offered coal through road mode from available pithead stock to those Plants located within 50 Kms to 60 Kms from the nearest mines. (c) & (d): Coal India Limited has launched the ‘Grahak Sadak Koyla Vitaran App’ on 01.11.2017 aimed at benefiting customers that are being supplied coal by road. It is a tool to monitor that the dispatches are

made on the fair principle of ‘First in First Out’ and keeps track of all the activities from issuance of Sale Order to physical delivery of coal by road. This shall help to achieve transparency in dispatch operations. The main benefits of the App for the customers include easy accessibility of the information at the click of the button, apart from transparency in the system of loading programme and dispatch. The app also helps in logistics planning for lifting of coal in tune with the loading programmes. It further helps in improved planning of procurement, production and stock management by the customers. It also provides date-wise, truck-wise quantity of coal delivered against the Sale Orders and information related to Scheme-wise, Colliery-wise, Grade-wise, customer-wise details of Sale Orders issued during a period. In terms of loading, it provides allotment verses lifting status in details from different sources by truck and summary of the coal dispatch.

Q. No. 899. Zero Thermal Coal Imports. 07.02.2018 DR. P. VENUGOPAL: Will the Minister of COAL be pleased to state: (a) whether the Government is aiming to bring down thermal coal imports in the power public sector undertakings to zero in the current financial year; (b) if so, whether this move would reduce the country’s import bill by about Rs. 17,000 crore; (c) whether the Government is considering to convince private companies operating in the power space to totally stop the import of thermal fossil fuel; and (d) if so, the steps taken in this regard?

ANSWER MINISTER OF RAILWAYS AND COAL (SHRI PIYUSH GOYAL) (a) : As per current import policy, coal is kept under Open General License (OGL) and consumers are free to import coal from the source of their choice as per the contractual prices on payment of applicable duty. CEA has reported that, with 47% reduction in import, indigenous coal based power plants have imported 19.87 MT coal in 2016-17 against 37.21 MT in 201516. In absolute term substitution of import by indigenous coal has been 17.34 MT. In the current Fiscal, CCAI Monthly Newsletter February 2018

| 27

from April to December, 2017, import of coal by these plants have further reduced to 12.8 MT from 15.42 MT during same period last year. For imported coal based plants, as reported by CEA, there was an increase in coal import in 2016-17 to the tune of 2.8 MT as compared to 2015-16, due to commissioning of new plants in 2016-17. However, in the current Fiscal, from April to December 2017, import of coal by these plants have been reduced to 30.83 MT as compared to 34.6 MT during same period last year. Further, the gap between demand and supply of coal cannot be bridged completely as power plants designed on imported coal will continue to import coal for their production. (b) : All India Coal imports upto October 2016-17 and 2017-18 is given below:(Quantity in Million Tonnes ) Year

Coking Coal

Non Coking Coal

Total Coal

2016-17 #

23.65

92.64

116.30

2017-18 #

26.95

89.18

116.12

Absolute Growth

3.30

-3.46

-0.18

Growth in %

14.0

-3.7

-0.2

# Up to October

The value of coal import depends upon the prices of coal in the International market and fluctuates accordingly. & (d): CIL had taken steps for promotion of import substitution through source rationalization with part supply from higher grade coal sources. Coal from various sources including higher grade were offered through various types of e-auction including special forward e-auction with ease-of-business terms like flexi tenure of lifting, reduction of EMD and floor price to cater to requirement of various consumers including TPPs not having FSA with CIL. These factors have also contributed to fall in coal import.

Q. No. 902. Closure of Coal Mines.

07.02.2018

DR. J. JAYAVARDHAN: SHRIMATI SUPRIYA SULE: SHRI P.R. SUNDARAM: SHRI DHANANJAY MAHADIK: SHRI MOHITE PATIL VIJAYSINH SHANKARRAO: DR. HEENA VIJAYKUMAR GAVIT:: Will the Minister of Coal be pleased to state: (a) the State-wise, company-wise and year-wise details of the coal mines closed/abandoned during the last three years and the current year along with reasons therefor and the norms for closing the coal mines; (b) whether any assessment has been made regarding the loss/profit occurred as a result of the closure of coal mines and if so, the details thereof and the steps taken/being taken by the Government for rehabilitation of unemployed labourers of the said closed mines; (c) whether the Government proposes to revive these closed coal mines; and if so, the details thereof?

ANSWER MINISTER OF RAILWAYS AND COAL (SHRI PIYUSH GOYAL) (a)& (b) : The State-wise, company-wise and year-wise details of the coal mines of Coal India Limited, closed/

28 | CCAI Monthly Newsletter February 2018

abandoned/discontinued during the last three years and the current year (as on 1.10.17) are given below: Name of Closed/ Abandoned mines

Year

Lachipur colliery UG

2014-15

West Bengal

K. D. Incline

2015-16

Ghusik UG

2015-16

Haripur UG

State

Name of Closed/

Year

State

Belbaid OC

2015-16

West Bengal

Mahabir OC

2016-17

West Bengal

MallikBasti OC

2017-18

West Bengal

2015-16

West Bengal

Ratibati UG

2017-18

West Bengal

Parasea 6&7 incline UG

2015-16

West Bengal

Barmondia A UG

2017-18

West Bengal

Amrasota UG

2015-16

West Bengal

Mandmand UG

2017-18

Jharkhand Jharkhand

Abandoned mines

Eastern Coalfields Ltd.:

Bharat Coking Coal Ltd.: Ena OC

2014-15

Jharkhand

Bera OC

2017-18

Basdeopur UG

2014-15

Jharkhand

Sudamdih Incline

2017-18

Jharkhand

Hurriladih UG

2014-15

Jharkhand

Gadhur

2017-18

Jharkhand

Kenduadih Mixed

2015-16

Jharkhand

Basuria

2017-18

Jharkhand

Murulidih 20/21 UG

2015-16

Jharkhand

Bararee

2017-18

Jharkhand

Burragarh UG

2016-17

Jharkhand

East Basuria

2017-18

Jharkhand

Kujama OC

2017-18

Jharkhand

Gandudih Khas Kusundaa

2017-18

Jharkhand

Amal. East Bhagatdfih Simlabahal

2017-18

Jharkhan

Saunda-D UG

2017-18

Jharkhand

Central Coalfields Ltd.: Karo I UG

2016-17

Jharkhand

Khas Mahal UG

2016-17

Jharkhand

Kuju UG

2017-18

Jharkhand

Ray Bachra UG

2017-18

Jharkhand

Swang UG

2017-18

Jharkhand

Topa UG

2017-18

Jharkhand

Sayal-D UG

2017-18

Jharkhand

Sirka UG

2017-18

Jharkhand

Kargali(BSI) UG

2017-18

Jharkhand

Jarangdih UG

2017-18

Jharkhand

Argada UG

2017-18

Jharkhand

Hindustan Lalpeth.3 UG

2016-17

Maha-rashtra

ChandaRayatwari UG

2017-18

RawanwadaKhas UG

2016-17

Madhya pradesh

Ganapati UG

2017-18

Maha-rashtra Madhya

Thesgora UG

2016-17

Madhya Pradesh

Ambara UG

2017-18

Dhoptala OC

2016-17

Maha-rashtra

HLC-1 UG

2017-18

Ghugus OC

2016-17

Maha-rashtra

Vishnupuri-1 UG

2017-18

Makardho OC kada-II

2016-17

Maha-rashtra

Rajgamar 6&7 UG

2015-16

Chhattisgarh

North Jhagrakhand

2016-17

Kurasia OC

2016-17

Jamuna OC Dugga OC

Western Coalfields Ltd.:

South Eastern Coalfields Ltd.: Kotma West UG

2017-18

Chhattisgarh

North Chirmiri UG

2017-18

Chhattisgarh

Surakachhar 5&6 UG

2017-18

2016-17

Madhya Pradesh

Govinda UG

2017-18

2016-17

Chhattisgarh

Kalyani UG

2017-18

Pradesh Madhya Pradesh Maha-rashtra Madhya Pradesh

Madhya Pradesh Chhattisgarh Chhattisgarh Madhya Pradesh Chhattisgarh

CCAI Monthly Newsletter February 2018

| 29

Katkona 3&4 UG

2017-18

Chhattisgarh

Palkimara UG

2017-18

Anjanhill UG

2017-18

Chhattisgarh

Birsingpur UG

2017-18

Dharam UG

2017-18

Chhattisgarh

Chhattisgarh Madhya Pradesh

Mahanadi Coalfields Ltd: Chhendipada OCP

2016-17

Odisha

Mine No 4

2017-18

Odisha

The reasons for closure/suspension/abandonment of these mines include depletion/exhaustion of coal reserves, unsafe mining conditions arising out of fire, other safety considerations, inundation, adverse geo-mining conditions etc. Most of the underground (UG) mines are incurring heavy losses. Closing of these unsafe and unviable mines have reduced the losses previously being incurred by them. All manpower of these closed mines have been suitably redeployed in other mines or other suitable areas of the subsidiary companies. (c)& (d).: Some of the closed UG mines have already been converted to OC mines wherever viable. Other mines which are having sufficient extractable reserves are reconsidered if and when they become economically viable in future by introduction of new technology or change of method of work.

GOVERNMENT OF INDIA MINISTRY OF COAL RAJYA SABHA Q. No. 48. Supply of coal to non-regulated sector 02.02.2018 DR. R. LAKSHMANAN: Will the Minister of COAL be pleased to state: (a) the details of steps taken by Government to ensure supply of coal to the non-regulated sector viz., steel, cement and sponge iron; and (b) whether any Memorandum of Understanding was signed in this regard, if so, the details thereof and if not, the reasons therefor?

ANSWER MINISTER OF RAILWAYS AND COAL (SHRI PIYUSH GOYAL) (a) : The coal supply to Non-Regulated Sector (NRS) is through Fuel Supply Agreements (FSAs) based on their long term linkage /Letter of Assurance (LoA)

30 | CCAI Monthly Newsletter February 2018

as recommended by Standing Linkage Committee (Long-Term). The coal supply to the steel Public Sector Units (PSUs) is also through Memorandum of Understanding (MoU). Ministry of Coal vide letter No. 23011/51/2015-CPD (Pt-I) dated 15.02.2016 issued policy guidelines for Auction of linkages of Non-Regulated Sector. In this policy, it has been stipulated that all allocations of linkages/LOAs for non-regulated sector viz. Cement, Steel/Sponge Iron, Aluminum and Others [excluding fertilizer (urea sector)], including their CPPs, shall henceforth be auction based. It is also provided that there will be no renewal of existing FSAs of non-regulated sectors [except FSAs of CPSEs and Fertilizer (urea)]. CIL has accordingly been conducting linkage auctions under Non-Regulated Sector, including for Steel, Cement & Sponge Iron, and FSAs are signed with the successful bidders by the subsidiary coal companies of CIL. In addition to it, coal is supplied to the NRS through exclusive e-auction of coal, in which only end use consumers of NRS participate. (b) : In the case of steel PSUs, coal supplies through

MoU are made to SAIL and RINL. In 2017-18 (up to 31.12.2017), the coal supply through MoU has been 17.97 lakh tonnes.

Q. No. 49. Supply of coal to thermal power stations 02.02.2018 SHRI RIPUN BORA: Will the Minister of COAL be pleased to state: (a) whether it is a fact that coal supplies to thermal power stations are inadequate; (b) if so, the demand and supply of coal to plants during the last one year, month-wise; (c) the report of coal stock by Coal India Limited and the expected demand of thermal power plants in the next six months; and (d) the proposal to bridge the gap, if any, between demand and supply of coal?

ANSWER MINISTER OF RAILWAYS AND COAL (SHRI PIYUSH GOYAL) (a) & (b): Coal supplies are made to the Power Plants in terms of the Fuel Supply Agreement executed between Power Gencos and coal companies. Moreover, the power plants can also take coal through Special Forward E-Auction Scheme where coal is offered exclusively for power plants in regulated sector. Actual supply of coal depends on programme submitted by the Power Plants, logistics and various other factors. Many of the power stations of the country opted to consume coal from their piled up coal stock for power generation and restricted coal supplies from the Coal Companies during major part of the last year and in the initial months of this fiscal. As a result, total stock with the power stations which was 38.87 Million Tonnes (MT) in the beginning of 2016- 17 had reduced to about 27.74 MT by the end of 2016-17, while coal stock with CIL increased from 57.64 MT to 68.42 MT during the same period. The supply of coal to the Power Sector has risen to 210.3 MT in first six months of the fiscal against 195.2 MT during the corresponding period of 2016-17, thus recording a growth of 7.74% (provisional). Month-wise supply of coal to power plants by CIL is at Annexure-I and the month-wise coalsupply by SCCL to power plants is at Annexure-II.

(c): The total vendible coal stock of Coal India limited as on 28.01.2018 (provisionally) is 33.5 MT. The demand of coal from CIL for thermal power plants for the first six months of 2018, calculated on the basis of existing Fuel Supply Agreements, is likely to be around 278.2 MT. (d): The Power Houses have the option to fulfill the gap between their requisite demand and supply by the following means: Taking coal through Special Forward e-Auction conducted by CIL throughout the year. Building up stock during lean period by agreeing to take more coal than their Annual Contracted Quantity, subject to availability and other terms. Importing coal, by Thermal Power Plants which are designed on imported coal. Using the coal produced by captive coal blocks which have been allocated by Government of India, if available. Annexure- I Monthwise Coal supply to Power sector during 2017 by CIL (Provisional) (figs in MT) Materialization against commitment at trigger level (%)

MONTH

Contracted Qty at Trigger Level

Supply

January

38.1

36.4

February

38.2

33.8

March

38.3

36.7

April

34.3

31.9

May

34.7

33.4

June

34.7

32.2

July

30.7

31.1

101

August

30.9

31.2

101

September

31.6

32.3

102

October

33.9

37.0

109

November

36.6

38.5

105

December

36.7

38.6

105

Grand Total

418.6

413.2

In addition to the above supply against contracted quantity, a supply of 34.46 MT is also made to Power Sector under special forward e-auction during this period.

CCAI Monthly Newsletter February 2018

| 31

(SHRI PIYUSH GOYAL)

Annexure-II Monthwise Coal supply to Power Sector during 2017 by SCCL FIG IN MT MONTH

Contracted Qty at Trigger level

SUPPLY

Materialization against commitment at trigger level (%)

January

4.01

4.975

124.06

February

3.62

4.702

129.89

March

4.01

5.362

133.72

April

3.69

4.516

122.38

May

3.81

4.332

113.70

June

3.69

4.053

109.84

July

3.81

4.104

107.72

August

3.81

3.93

103.15

September

3.69

3.955

107.18

October

3.81

4.194

110.08

November

3.69

4.677

126.75

December

3.81

4.857

127.48

Grand Total

45.45

53.657

118.06

Q. No. 838. Strategy to prevent coal crisis 09.02.2018 SHRI MAJEED MEMON: Will the Minister of COAL be pleased to state: (a) whether the country is coal surplus, if so, the reasons for shortage of coal at power plants; (b) whether it is a fact that several States were forced to resort to load shedding due to severe shortage of coal; and (c) if so, the strategy to be adopted to prevent coal crisis?

ANSWER MINISTER OF RAILWAYS AND COAL

32 | CCAI Monthly Newsletter February 2018

(a): Coal India Limited (CIL) and Singareni Collieries Company Limited (SCCL) make all efforts to meet the requirements of Power Sector in the Country. The Production and dispatch plan is also prepared keeping the same in view. However, many of the power stations of the country opted to restrict the coal supplies from the Coal Companies during major part of the last financial year and in the initial months of this fiscal when demand for power was subdued. The total stock at the power stationsâ&#x20AC;&#x2122; end which was 38.87 Million Tonnes (MT) in the beginning of 2016-17 had reduced to about 27.74 MT by the end of 2016-17, while coal stock with CIL increased from 57.64 MT to 68.42 MT during the same period. Hence, there had been no shortage of coal in the beginning of the current fiscal i.e. 2017-18 at CIL end, but coal stock at Power House end reduced as Power Houses preferred to consume coal from their own stock during 2016-17 and in the initial months of 2017-18. (b) & (c): As per Central Electricity Authority (CEA), during April-December, 2017, there was a marginal demand-supply gap of 0.7% in terms of energy in the country. However, this demand-supply gap in energy not supplied is mostly because of factors other than inadequacy of power availability in the country. During the second quarter of 2017-18, there was a spurt in demand in thermal power arising out of drop in power generation from other sources like nuclear, hydro and wind energy. However, coordinated efforts of Ministry of Coal, Coal India Ltd., and Railways ensured stepping up supplies to Power Sector and averted power crisis situation. In fact, coal supplies to Power Sector from CIL grew by 20%, 19%, 17%, 9% and 3% during the months of August, 2017, September, 2017, October, 2017, November 2017 & December 2017 respectively as compared to the supplies during the same months of last year. In addition to the monitoring mechanism available at coal companies, coal supplies to Power Utility sector is monitored regularly by an inter-Ministerial Sub-Group comprising representatives of Ministry of Power, Ministry of Coal and Ministry of Railways constituted by the Infrastructure Review Committee of Cabinet Secretariat. This Sub-Group takes various operational decisions for meeting any contingent situations relating to coal supplies to Power sector including critical coal stock position for power plants. Moreover, the situation is also monitored jointly by Secretary (Coal), Secretary (Power) and Member Traffic, Railway Board in regular reviews. Due to the above efforts, coal stock at power Stations have reached to 14.68 MT (as on 04.02.2018).

Q. No. 841. Allotment of coal mines to CIL

09.02.2018

SHRIMATI VIJILA SATHYANANTH Will the Minister of COAL be pleased to state: (a) whether it is a fact that Government has decided to allot 11 coal mines to Coal India Limited (CIL); (b) whether it is also a fact that CIL is planning to increase the production capacity by 225 million tonnes: (c) whether it is also a fact that CIL had informed the Government that its three subsidiaries do not have adequate coal reserves at present; and (d) if so, the details thereof?

ANSWER MINISTER OF RAILWAYS AND COAL (SHRI PIYUSH GOYAL) (a) to (d): Coal India Ltd. (CIL) had requested the Government for allotment of additional coal mines so as to make its 3 subsidiaries viz. Eastern Coalfields Ltd. (ECL), Bharat Coking Coal Ltd. (BCCL) and Western Coalfields Ltd. (WCL), 100 MT plus coal producing subsidiaries as these 3 subsidiaries do not have adequate coal reserves at present. Considering the request of CIL, 11 coal mines have been allocated to CIL under the provisions of the Coal Mines (Special Provisions) Act, 2015 and the MMDR Act, 1957. Addition of these 11 coal mines will add about 225 MT of coal in its annual production capacity. The details of these 11 coal mines are as under: Sl. No

Name of Coal Mine

Amarkonda Murgadangal

Jharkhand

Brahmani

Jharkhand

Chichro Patsimal

Jharkhand

4-5

Rampia and Dip side of Rampia

Odisha

6-7

Ghogharpalli and Dip Extension of Ghogharpalli

Odisha

Mandar Parvat

Bihar

Dhulia North

Jharkhand

Location

Name of Subsidiary company of CIL

ECL

WCL

BCCL 10

Mirzagaon

Bihar

Pirpainti- Barahat

Jharkhand

CCAI Monthly Newsletter February 2018

| 33

Q. No. 842. Joint Ventures for evacuation of coal through Railways 09.02.2018 SHRIMATI SASIKALA PUSHPA: Will the Minister of COAL be pleased to state: (a) whether Government has proposed to float more Joint Ventures for evacuation of coal through Railways; (b) if so, the details thereof; (c) whether any such Joint Venture has been proposed in the Southern Railway; (d) if so, the details thereof; and (e) if not, the reasons therefor?

ANSWER MINISTER OF COAL AND RAILWAYS ( SHRI PIYUSH GOYAL )

34 | CCAI Monthly Newsletter February 2018

(a)& (b): Coal India Limited (CIL) a PSU under Ministry of Coal has participated in four JV railway infrastructure companies namely Jharkhand Central Railway Limited (JCRL), Mahanadi Coal Railway Limited (MCRL), Chhattisgarh East Railway Limited (CERL) and Chhattisgarh East West Railway Limited (CEWRL) for construction of dedicated rail corridor for evacuation of coal from the States of Jharkhand, Odisha & Chhattisgarh respectively. There is no proposal to float more Joint Ventures for evacuation of coal at present. (c) to (e): As of now there is no proposal to form any joint venture with Southern Railways due to commercial reasons.

Q. No. 845. Allocation of coal to Karnataka 09.02.2018 SHRI RAJEEV CHANDRASEKHAR: Will the Minister of COAL be pleased to state:

(a) whether it is a fact that between April and December, 2017, Karnataka was allocated 119.57 lakh metric tonnes of coal, of which only 63.09 lakh metric tonnes was supplied; (b) if so, the reasons therefor; (c) the quantity of coal demanded by Government of Karnataka for the period from January to March, 2018; and (d) the quantity of coal allocated and expected to be supplied to Karnataka between January and March, 2018?

ANSWER MINISTER OF RAILWAYS AND COAL (SHRI PIYUSH GOYAL) (a) & (b): The Raichur Thermal Power Station (TPS) of Karnataka has Fuel Supply Agreement (FSA) where the pro rata Annual Contract Quantity (ACQ) for the

period from April to December 2017 was 59.55 Lakh Tonnes (LT) and actual coal supply during the same period was 51.1 LT. The coal supply to other power plants of the State is through Memorandum of Understanding (MoU) and coal is supplied on a best effort basis. The prorata MoU quantity for the period from April to December 2017 was 52.374 LT against which 28.26 LT was supplied. WCL had offered Karnataka Power Corporation Limited (KPCL) to lift quantities as per their requirement from a mix of Rail and Road modes considering the logistics feasibility. However, KPCL did not lift coal by road. (c) & (d): The coal requirements against FSA of power plants of Karnataka between January and March 2018 is 21.86 LT and the coal requirement against MoU of the power plants of the State for the same period is 18.75 LT. It is expected that the coal supply against the FSA requirements shall be met and the supplies against MoU shall be made on a best effort basis.

CCAI Monthly Newsletter February 2018

| 35

OVERALL DOMESTIC COAL SCENARIO Coal Production (in MT) Company

February, 2018

% Achievement

Target

Actual

CIL

61.4

54.5

SCCL

5.3

6.3

April- February 2018

% Achievement

Target

Actual

88.7%

531.3

495.1

93.2%

117.1%

56.6

54.4

96.2%

Overall Offtake (in MT) Company

February, 2018

February, 2017

% Growth

April – February, 2018

April – February, 2017

% Growth

CIL

49.97

SCCL

5.4

47.7

4.7%

525.1

490.9

7.0%

5.7

-4.7%

58.3

54.3

7.3%

April – February, 2018

April – February, 2017

% Growth

Coal Despatch to Power (Coal and Coal Products) (in MT) Company

February, 2018

February, 2017

% Growth

CIL

37.76

36.54

3.3%

411.3

383.8

7.2%

SCCL

4.39

4.70

-6.7%

48.12

46.14

4.3%

Spot E-auction of Coal (in MT) Company

Coal Qty. Allocated February, 2018

Coal Qty. Allocated February 2017

Increase over notified price

Coal Qty. Allocated April - February, 2018

Coal Qty. Allocated February, 2017

Increase over notified price

CIL

5.96

5.33

73%

51.38

48.31

66%

Special Forward E-auction for Power (in MT) Company CIL

Coal Qty. Allocated February, 2018

Coal Qty. Allocated February 2017

Increase over notified price

Coal Qty. Allocated April -February, 2018

Coal Qty. Allocated April -February 2017

Increase over notified price

0.70

1.18

96%

28.93

41.67

27%

Exclusive E-auction for Non- Power (in MT) Company

Coal Qty. Allocated February, 2018

Coal Qty. Allocated February, 2017

Increase over notified price

Coal Qty. Allocated April -February, 2018

Coal Qty. Allocated April -February, 2017

Increase over notified price

CIL

0.0

0.25

10.78

4.81

28%

Company

Coal Qty. Allocated February, 2018

Coal Qty. Allocated February, 2017

Increase over notified price

Coal Qty. Allocated April -February, 2018

Coal Qty. Allocated April -February 2017

Increase over notified price

CIL

0.00

0.70

6.26

39%

Special Spot E-auction (in MT)

36 | CCAI Monthly Newsletter February 2018

CCAI Monthly Newsletter February 2018

| 37

271245.51

TOTAL

Source CEA

TOTAL

BHUTAN IMP

HYDRO

69.68

NUCLEAR

71.81

62.59

59.87

ACTUAL*

FEB-2018

1229400

PROGRAM

THERMAL