CCAI Newsletter December-20

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Vol. XLIX No. 09 Published on : 28.12.2020

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From the Editor’s Desk

Determined to make a fresh start from the disastrous con dition caused by the pandemic outbreak in 2020, India’s national miner Coal India Limited is likely to undergo mu ltilayered reforms in marketing and sales in 2021 including bringing multiple types of coal auction s und er one bracket to enable a better disc overy of prices.

Coal India has also registered 77% growth in e-auction sale s in AprilNovember period of FY 2020 -21 while volume booking in e-auctions for the first seven months of the ongoing fiscal ending Oct obe r at 59 MT, increased by 28 MT. in 20 21, the coal behemoth is hea vily banking on supplies to Non-power sec tor to expand sales as the dem and from the power sector, its main con sumer, is yet to fully resurge.

CIL’s average loading per day to the non-power sec tor during December’20 marked a steep 59% growth at 40 rakes per day. The NRS consumers predominantly con sisting of cement, sponge iron , captive power plants and a host of oth er industries is also showing a ten dency to lift more coal after par tial ly recovering from the downtu rn during lockdown period. Buoyed by the demand of rejuvenated Non-power sector, Coal India’s offtake ros e by 8 percent in November’20 .

The all-India energy demand has started recovering since October for the second consecutive month , after declining over March-Au gust 2020 due to fur ther relaxation in lock down for economic activities.

Electricity generation (excluding renewa bles) increased 8.9 per cent yoy to 107.7 billion units in October 2020 and is on a upward trend but is yet to reach the previous levels.

Meanwhile, the steel sector in the country has quickly bounced back with a surge in domestic dem and. Domestic steel prices has risen twice in a week in December--a stiff hike Rs 3,000 per ton ne increase in hot-rolled coil (HRC) prices effective from December 2, followed by another hike of Rs 2,200 per tonne in benchmark price.

Considering the positive trend, ICRA has revised its outlook for India’s stee l sector to negative from stable.

Owing to strong production discipline especially in southe rn India, cement prices has risen by 18% y-o-y. Cement demand in the East has been the strongest of all regions suppor ted by governme nt spending as well as increased labour ava ilability as migrant workers returned to their hometowns during pan demic.

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Content Vol. XLIX No. 09 December 2020

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

4, India Exchange Place - 7th Floor Kolkata - 700 001 Landline : +91 33 22304488 / 22621516 E-mail : sec.ccai@gmail.com Website : www.ccai.co.in

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Consumers' Page

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Power

18

Domestic

24

Global

Editor : Subhasri Nandi Annual Subscription Rs. 400/(including postage) 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.

28 Monthly Summary Of

Imported Coal &Petcoke

32 Overall Domestic Coal Scenario 33

Production And Offtake Performance Of Cil And Subsidiary Companies

CCAI Monthly Newsletter December 2020

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CONSUMERS’ PAGE Present Coal Scenario: Total coal production achieved by CIL was 58.30 million tonnes in December 2020 a growth of 0.5% compared to 58 million tonnes lifted in December 2019. For the period of April 2020- December 2020, the national miner has produced 392.80 million tonnes, registering a growth of 1.1% over 388.40million tonnes produced in the same period last year.

CIL’s Total offtake for December stood at 52.60 million tonnes. The offtake has been reduced by 2.1% compared to December 2019’s figure of 53.70 MT. Total offtake for the period of April 2020 to December 2020 has been 409.70 MT.

Submissions made by both Power and NRS consumers: 1. Request for amendment in over loading & under loading clause of FSA and e-Auctions:

sumers do not have any control over quantity of coal being loaded in the rakes. However, various additional charges are levied on consumers from both Power and Non-power sector by the Indian Railways due to over loading of rakes i.e. punitive charges for load adjustment/detention, engine haulage charges etc.

The responsibility of coal loading in rakes is with the Subsidiaries Coal Companies and the con-

In case of under-loading, the full amount is not refunded, because according to FSA provision,

06 | CCAI Monthly Newsletter December 2020

coal companies give under loading charges limited to the difference of CC / stencil capacity and actual weight of coal loaded in the wagon.

But the Railway charges freight as per permissible carrying capacity (PCC ) / chargeable weight and in most cases PCC / chargeable weight is more than the stencil carrying capacity.

Request has been made to CIL for amendment of the above-mentioned clause so that the sellers bear the penalty on overloading charges and consumers pay only the cost of excess coal quantity over the chargeable weight supplied by the Subsidiaries.

2. Submission regarding issue of ungraded coal supplied to Power and NRS consumers: *Power sector have stated that in spite of the provision in their FSAs, refunds for supply of ungraded coal are still pending from different Subsidiaries even after two years or more in some cases.

Request has been made to CIL by the Power sector so that the pending refunds on account of ungraded coal may be processed at the earliest. In case of Formulation of a new policy in this regard, it may be expedited as the fund is stuck for a long time. *The NRS consumers are unable to get long pending refunds through credit notes even when the quality of coal supplied is lower than the G-17 grade because unlike the Power sector there is no provision for issuing credit notes in case of supply of ungraded coal in the FSAs for NRS consumers.

Request has been made to CIL to expedite the formulation of a suitable policy in line with the Power sector so that the NRS consumers can get their requisite refund in case of supply of ungraded coal.

3. Submission to ECL for immediate refund of long-pending quality claims for supply of lower grade coal: As per 3rd party analysis results by QCI, there had been a consistent grade variation to the tune of 3-5 grades in the coal supplied by ECL to certain consumers from both Power and Non-power sector between September'18- December’18 This has lead to quality claims worth crores of rupees which is pending with ECL for more than 2 years.

Request has been made to ECL for immediate refund of the long-pending quality claims to the affected consumers.

4. Submission to CCL regarding nonimposition of Forest Transit Fees on consumers: The Central Coalfields Limited vide notice no.CCL/HQ/M&S/STC/20-21/4283 dated 09.11.2020, the consumers procuring coal from mines operating completely or partially in designated forest lands, are being charged Rs. 57/-PMT as Forest Transit Fee. As the consumers are already paying a number of additional charges such as COVID Cess, increased STC charges as well as increased base price of coal etc. Submission has been made to CIL and CCL for not levying Forest Transit Fees on consumers.

Submissions made by Power Sector Consumers: 5. Submission regarding constant short-receipt of coal from MCL’s Talcher sidings: Certain power sector consumers procuring coal from MCL’s Talcher sidings are constantly facCCAI Monthly Newsletter December 2020

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ing the issue of short-receipt of coal in the rakes weighed at Spur Weighbridges since the last few months. The short receipt faced by one of the Power consumers amounts to 1.5% to 5.50% in both BOXN and BOBRN rakes in December’20.

Request has been made to MCL for recalibration of all spur weighbridges at the earliest. Also, weighment of rakes may be arranged at any operational weighbridges en-route till the Spur Weighbridges are calibrated.

6. Submission by Power sector to regarding BCCL pricing of Washery grade - IV, V, VI coal:

A number of power producers have been penalised by the respective Subsidiaries for short/ non-lifting during the lockdown period even as the power plants could not lift the quantity of coal allotted to them during that period due to significant dip in power demand, lack of workforce leading to unloading issues at the plant ends etc.

Request has been made to MoC and CIL so that the subsidiaries may be allowed to extend General Force Majeure for waiver of performance related obligations from 24th March till September 2020.

The price of Washery grade IV, V & VI was reduced by BCCL during the pandemic induced lockdown period in 2020. However, BCCL’s decision to revise the price structure of W-IV, V, VI has greatly impacted the landed cost of such coal and make it commercially unviable as the coal quality is not at all commensurate with the present price structure.

Submissions made by Nonpower Sector Consumers:

Request has been made to BCCL for roll back of Washery grade coal price for the power sector to the previous price structure. Also, BCCL is requested to ensure supply of Non-coking coal with VM of around 20% or higher for the smooth function of power plants.

For certain NRS consumers, Excess payment made towards WCL as coal value is pending since many months. Also, the refund of differential CST amount by the coal company is pending even after the consumers have submitted the ‘C form’.

7. Submission regarding extending general Force Majeure relief till September 2020 against short-lifting by Power sector:

Request has been made to WCL for immediate processing of the long-pending refunds considering the abject financial condition of the NRS consumers.

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8. Submission to WCL regarding pending refund of excess payment against coal value and Differential CST amount:

CCAI CCAIMonthly MonthlyNewsletter NewsletterSeptember November December 2020 2019

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POWER Government permits thermal power plants to change the coal source without seeking amendment in Environmental Clearance Thermal power plants are granted Environmental Clearance ("EC") as per the capacities mentioned in the Schedule to the Environment Impact Assessment ("EIA") Notification, 2006.

The EC is granted based on a specific coal source and any change in fuel source mandates seeking an amendment in EC. However, the Ministry of Environment, Forest and Climate Change ("MoEF&CC") through a recent office memorandum ("OM") dated 11.11.2020 has done away with the requirement of seeking an amendment in EC when there is a change in source of coal by thermal power plants.

The present process of seeking an amendment

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in EC due to a change in coal source involves certain stages and would approximately take a couple of months if not more. As per the OM, in order to simplify the procedure for change in coal source and encourage thermal power plants to use domestic coal, the MoEF&CC has decided to permit all the thermal power plants (including captive power plants) having EC to change the coal source (from imported to domestic, domestic to domestic, and domestic to imported) including lignite, without seeking the amendment in EC. As per the OM, the change in coal source can be done directly through e-auctions / short term linkages / long term linkages / other linkage options of Ministry of Coal or any organisation recognised for allotting coal linkages. However, this permission to change coal source without seeking amendment in EC is subject to the following conditions:

Details regarding change in source (location of the source, proposed quantity, distance from the power plant and mode of transportation), quality (ash, sulphur, moisture content and calorific value) shall be informed to the MoEF&CC and its concerned Regional Office. The quantity of coal transported from each source along with the mode of transportation shall be submitted as a part of the EC Compliance Report.

The applicable flue gas emissions standards for particulate matter, sulphur dioxide, oxides of nitrogen and mercury shall be complied in line with MoEF&CC's Notification vide S.O. 3305(E) dated 7.12.2015 and subsequent emissions. A progress of implementation and its compliance shall be submitted as part of Compliance Report.

Govt may unveil ₹3 trillion power supply reform Finance minister NirmalaSitharaman may announce a ₹3 trillion electricity distribution reform programme in the Union budget to help reduce losses and improve the efficiency of power distribution utilities, a government official said.

The Reforms-Linked, Result-Based Scheme for Distribution—initially referred to as the Atal Distribution System Improvement Yojana—was approved by the Public Investment Board, a government body that examines the proposals, earlier this month.

The scheme is aimed at helping power distribution companies (discoms) trim electricity losses to 12-15% from the present level and gradually narrow the deficit between the cost of electricity and the price at which it is supplied to ‘zero’ by March 2025. The reforms are also aimed at improving the reliability and quality of power supply.

The government is expected to contribute around ₹60,000 crore of the scheme’s corpus, and the rest may be raised from multilateral funding

agencies such as the Asian Development Bank (ADB) and the World Bank, the government official said, requesting anonymity.

The new scheme will also subsume ongoing programmes such as the Integrated Power Development Scheme and the DeenDayalUpadhyaya Gram JyotiYojana, and funds will be released to discoms subject to them meeting reform-related milestones.

“The Centre’s contribution can be met through the previous commitment of the ongoing schemes. There will be no additional financial burden on the government," the official said.

The proposed scheme may also have a compulsory prepaid and smart metering component to be implemented across the power distribution chain, including in about 250 million households.

Government promulgates rules for right of power consumers The government has promulgated rules for rights of electricity consumers which provide for penalties uptoRs 1 lakh on distribution companies for gratuitous load shedding and delay in grant of new connection or addressing a faulty meter.

Power minister R K Singh said that these rules shall empower the consumers of electricity.

“These rules emanate from the conviction that the power systems exist to serve the consumers and the consumers have rights to get the services and reliable, quality electricity,” he said.

Distribution Companies across the country are monopolies – whether government or private – and the consumer has no alternative, Singh said. Therefore it was necessary that the consumers’ rights be laid down in rules and a system for enforcement of these rights be put in place.

The key areas are covered in the Electricity (Rights of consumers) Rules are release of new CCAI Monthly Newsletter December 2020

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connection and modification in existing connection, metering arrangement, billing and payment, disconnection and reconnection, reliability of supply and compensation mechanism.

other Google services went offline for nearly an hour Icra upgrades outlook for Indian steel sector to stable

Power consumers spared of tarPower minister says inefficiency iff hike despite financial crunch: in state discoms a barrier in Minister investment; check how much In spite of the huge revenue deficit caused by loss they suffer the COVID-19 pandemic and the severe finanInefficiency in billing and collection is the major reason for losses in the distribution companies.

Power sector, discoms, distribution companies, investment, discom losses.

The losses of discoms stood at Rs 33,894 crore in FY17, Rs 29,452 crore in FY18, and jumped to Rs 49,623 crore in FY19.

Power minister R K Singh said that inefficiency in billing and collection is the major reason for losses in the distribution companies. R K Singh added if this inefficiency is taken care of, every discom will make profits. Speaking at the 93rd edition of FICCI AGM, he further said that the investment will not come unless there is viability in the system. The power minister also underlined that India is the fastest-growing Renewable Energy capacity in the world and has emerged as the most attractive destination for investment in the renewable sector.

The losses of discoms stood at Rs 33,894 crore in FY17, Rs 29,452 crore in FY18, and jumped to Rs 49,623 crore in FY19, according to the data provided in Lok Sabha. There are several reasons for discom losses, which include high AT&C losses; tariffs not being reflective of costs; uncovered revenue gaps; payment of subsidies

by State not in accordance with announcements, etc, R K Singh had said in Lok Sabha.

For instance, Google said its web search technology makes its app more useful for budgeting and sifting through transactions to spot granular categories such as "Mexican restaurants" or "T-shirts."Google reveals why Gmail, YouTube,

12 | CCAI Monthly Newsletter December 2020

cial crisis faced by the power distribution companies (Discoms), the government has refrained from increasing the tariff for the second consecutive year, Energy Minister BalineniSrinivasa Reddy has said.

Accordingly, the Discoms had filed their Annual Revenue Requirement (ARR) before the AP Electricity Regulatory Commission (APERC), the Minister said while launching the new logo of the AP State Energy Conservation Mission (APSECM).

The Minister said the government was taking all steps to improve the financial and operational performance of the power utilities.

As part of it, the government had already released â‚š17,904 crore for clearing the subsidy arrears of the Discoms pending as on March 31, 2019.

Govt issues guidelines for implementing feeder-level solarisation under PM-KUSUM scheme The government issued guidelines for implementation of feeder-level solarisation under the PM-KUSUM scheme after consultation with state governments. In February 2019, the government had approved the launch of the Pradhan Mantri Kisan Urja Surakshaevam Utthaan Mahabhiyan (PM-KUSUM) scheme to provide financial and water security to farmers through harnessing solar energy capacities of 25.75

gigawatt (GW) by 2022.

PM-KUSUM scheme Component-C provides for solarisation of grid-connected agriculture pumps. After consultation with states, it was decided to also allow feeder-level solarisation where instead of putting solar panels at each individual agriculture pump, a single solar power plant of capacity adequate to supply power to an agriculture feeder or multiple feeders will be installed.

This feeder-level solarisation would ensure economies of scale and better efficiency.

In a statement issued, the Ministry of New and Renewable Energy (MNRE) said, "Based on discussions held with states it has been decided to also include feeder level solarisation under Component-C of PM-KUSUM Scheme."

The scheme consists of three components.

Component-A includes installation of decentralised ground mounted grid connected renewable power plants, Component-B includes installation of standalone solar powered agriculture pumps and Component-C includes solarisation of grid-connected agriculture pumps.

OPINION: Rights of Electricity Consumers Rules: A critical appraisal Electricity distribution companies (DISCOMS) are natural monopolies. At the same time, electricity supply is largely seen as an obligation of the State – an obligation with dominant political facets. This dialectic has created systemic inefficiencies in power sector on one hand and a political demand for lower tariffs on another.

While many diverse forces have shaped the power sector in India, this simplistic objectification helps in explaining the typical attitude of distribution companies towards electricity consumers and the poor state of electricity supply services in large parts of the country.

India have a very distant relation with the consumers. Instead of being recognized as a mainstay of their earnings, consumers are reduced to genesis of most troubles that plague electricity distribution. At least that is the reality beyond the boundaries of our Tier-I and Tier-II cities. In this context, the Rights of Electricity Consumers notified by the Ministry of Power (MoP) through The Electricity (Rights of Consumers) Rules, 2020 (henceforth, the Rules) provide a crucial framework to safeguard interest of consumers.

The said rules span over some key regulatory domains, namely Electricity Supply Code, Standards of Performance for Distribution Licensee and Grievance Redressal Mechanism. State Electricity Regulatory Commissions (SERCs) have notified such regulations based on their interpretation of the Electricity Act 2003 and various policies notified by MoP over the years.

Hence, it is important to critically analyze these Rules and ascertain their potential impact on electricity consumers.

To begin with, the Rules provide much to celebrate. They are a definitive reinforcement of the government's commitment towards achieving 24x7 supply of electricity across the country.

They also define guidelines for key electricity related services such as release of new connection (or modification of existing connection), metering, billing and payment and grievance redressal. While states have existing regulations, the Rules provide a strict and uniform framework for SERCs to follow.

The mandate for introducing automated compensation (wherever feasible) to consumers in case of non-compliance of Standards of Performance is perhaps the highlight of the Rules. If implemented in spirit, they are likely to directly impact the outlook and commitment of DISCOMS toward quality of supply and services.

Herein also lies a monumental challenge for DISCOMS.

DISCOMS (especially public sector DISCOMS) in CCAI Monthly Newsletter December 2020

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Early winter: Power consumption growth slows to 4.7% in November India's power consumption growth rate slowed to 4.7 per cent at 98.37 billion units (BU) in November this year amid the onset of early winters especially in the Northern part of the country.

In November 2019, electricity consumption in the country was recorded at 93.94 BU, as per government data.

Power consumption had entered positive territory in September and recorded double-digit surge in October, showed the power ministry data.

In September this year, power consumption recorded a growth of 4.4 per cent at 112.24 BU, compared to 107.51 BU in the same month last year.

India's power consumption grew by nearly 12 per cent to 109.53 BU in October this year, as against 97.84 BU in the same month last year.

According to experts, the onset of early winters especially in the Northern part of the country has affected power consumption. Economic activities are almost near normal due easing of lockdown, they said adding that growth in power consumption would continue in coming months.

achieved by sourcing power in the most traditional way of power purchase agreements (PPAs). In third-party PPAs, a developer owns, operates, and maintains the renewable (PV/ Wind/Hybrid) system, and the offtaker purchases the renewable system’s electric yield for a pre-determined period at a pre-determined price. The arrangement allows the offtaker to receive stable and low-cost electricity.

While PPAs are undoubtedly the most popular instruments for meeting the sustainability goals, the emergence of virtual PPA or synthetic PPA (VPPA) is on the rise. Simply put, VPPAs are a kind of contracting structure which provide a financial hedge against any future energy fluctuations. These VPPAs help in meeting an organization’s sustainability goals with benefits as they function in the realm of price discovery and risk management.

Under a VPPA arrangement, the offtaker agrees to purchase a project’s renewable attribute at a pre-agreed price, while the renewable project receives the market price for energy sold in electricity exchange on day ahead/real time basis. If the market price is greater than the pre-agreed price, the offtaker receives the difference. On the other hand, if the market price is less than the pre-agreed price, the offtaker pays to the project to make up for the difference. Therefore, a VPPA works out to be a financial hedge against volatile electricity prices.

India plans to allow relinquished India’s wait for virtual Power coal-fired plants to sell power Purchase Agreements India's power ministry proposes letting coal-fired The need for clean energy is ever rising as businesses across the globe want to have in place a robust renewable energy strategy and focus on sustainable business practices reducing their carbon footprint. Reliance on clean energy resources also provides a reputational boost to organizations as stakeholders and consumers recognize them as businesses also contributing for society’s welfare. The goals are usually

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power plants keep selling power after completing their agreements with buyers, a letter seen

by Reuters shows, despite national promises to close old plants to curb pollution.

The proposal, if approved, would help old coal plants earn additional revenue, increase liquidity in short-term power markets and help distribution companies in states facing a power deficit

access cheaper power, the ministry said in the draft proposal.

"It is in the consumer interest to keep the tariff of electricity as low as possible," says the letter sent to power departments of India's states and the heads of federal government-run utilities such as NTPC Ltd. Such a move would enable federal-run electricity generators such as NTPC "to sell power in any mode" after distribution companies exit an agreement upon the completion of the tenure, the ministry said.

Power Minister R.K. Singh and Finance Minister NirmalaSitharaman have previously said they plan to shut old coal-fired power plants. The environment ministry has also pushed for shutting down coal plants, which account for 80% of India's industrial pollution, if they do not comply with green laws.

The outcome remains unclear. The power ministry has sought comments from the states and the heads of federal government-run power generators. A final decision on the proposal is not imminent.

Rider to old PPA cancellation policy a concern for NTPC The proposal is also silent on allocation of coal to power plants once they lose the PPA with discoms, which could be a concern for NTPC with which bulk of the old PPAs are signed, they added.

The average cost of NTPC’s thermal power projects put together is in the range of Rs 3.5- 3.6 per kWh, while the lowest bid price for solar has dropped to Rs 2 per kWh. The power ministry’s proposal that electricity discoms can relinquish power purchase agreements (PPAs) of over 25 years with the central generating stations (CGS) lacks clarity on whether these loss-making entities can retain a section of the pacts that makes business sense

for them, analysts said.

The proposal is also silent on allocation of coal to power plants once they lose the PPA with discoms, which could be a concern for NTPC with which bulk of the old PPAs are signed, they added.

The current coal policy framework allows access to coal only to those projects that have PPAs. Industry experts believe, the coal access policy needs to be amended to make it easy for central generating stations like NTPC to sell in the market once PPAs are cancelled.

A senior industry official told FE on condition of anonymity that the discoms may like to retain the pit-head projects compared to a far away plants, which will allow them to use low variable cost power, as their fixed cost is already amortised.

Power consumption grows 4.8% in first half of December After a gap of six months, power consumption recorded a year-on-year growth of 4.4 percent in September and 11.6 percent in October. power consumption, growth in power deman, power ministry data, power conduct during pandemic Power consumption was recorded at 48.04 BU during December 1-15 last year, according to the power ministry data.(IE Image) India’s power consumption grew 4.8 percent to 50.36 billion units (BU) in the first half of December this year, showing consistency in economic activities, as per government data. Power consumption was recorded at 48.04 BU during December 1-15 last year, according to the power ministry data.

For the full month of December 2019, power consumption was 101.08 BU. Therefore, the extrapolation of half-month data clearly indicates that power consumption is likely to record a

CCAI Monthly Newsletter December 2020

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year-on-year growth for the fourth month in a row, according to experts.

Discoms supply record 14,856 MW power in Madhya Pradesh A record 14,856 MW power was successfully supplied by electricity distribution companies in Madhya Pradesh, an official said.

The state faced a peak demand of 14,856 MW and the same was supplied by power companies operating in the state.

This was the highest-ever power supply in the history of the state, a Jabalpur-based public relations officer of MP Power Management Company said.

According to the official, a demand of more than 14,000 MW has been recorded in the state during the past ten days which was supplied successfully.

The previous highest peak demand was 14,555 MW, recorded on February 3 this year.

The official said that during the peak demand, Madhya Pradesh West Zone Power Distribution Company (Indore and Ujjain Division) supplied maximum power of 6,077 MW, Madhya Pradesh Madhya Pradesh Power Distribution Company (Bhopal and Gwalior Division) 4,752 MW and Madhya Pradesh East Region Power Distribution Company (Jabalpur, SagarAndRewa division) recorded supply of 4,028 MW.

Delhi wants clean energy but idle fossil fuel power capacity is a headache

Chief Executive Officer Ganesh Srinivasan said in a phone interview. It also plans to oppose any life time-extension plans for aging plants it has contracted to buy electricity from, he said.

The effort underscores how India’s electricity sector continues to struggle with debt and overcapacity after a massive build-out of plants to power a surge in economic activity that never fully materialized. The pandemic has accentuated the problem, leaving nearly half of India’s thermal power capacity idled, with the cost overhang impeding investment toward renewables and grid improvements.

“Our biggest priority is to reduce power purchase costs,” Srinivasan said. “We’re procuring renewables at a cheaper cost, but because we have so much of excess thermal long-term contracts, it limits our flexibility to buy more renewables.”

Solar power tariff decline supported by structural factors: Ind-Ra Continuous decline in solar power tariffs since the start of the current financial year (FY 202021) has been driven by a mix of structural and state-specific factors with the former likely to sustain over medium-term, India Ratings and Research (Ind-Ra) has said.

The tariffs declined to Rs 2.36 per kilowatt hour (kWh) in June and July, and Rs 2 in November.

In the latest bidding as well, while the winning bids are at Rs 2 per kilowatt hour (kWh), the highest bid was at Rs 2.43 per kilowatt hour (kWh) which is lower than the earlier tariffs.

India’s capital city is seeking to shed its onerous contracts with fossil fuel power plants to reduce costs and free up funds for clean energy.

The decline in tariffs is being driven by a lower capital cost per megawatt of around Rs 4 crore per megawatt because of advancement in panel designs, enabling a higher capacity utilisation factor (CUF).

Tata Power Delhi Distribution Ltd., which retails electricity to customers in New Delhi, is in talks with Delhi’s provincial government and the federal power ministry to get some of its contracted thermal power re-allocated to other states,

Besides, there has been a reduction in panel costs globally while financing costs have lowered. Ind-Ra estimates that a lower funding cost to foreign and domestic developers has resulted in a tariff decline of 10 to 15 paise per kWh.

16 | CCAI Monthly Newsletter December 2020

With Best Compliments From:

Sharda Ma

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COAL MERCHANTS, IMPORTERS & HANDLING AGENTS INDIA SOUTH AFRICA INDONESIA SINGAPORE HONG KONG NIGERIA

UGF 1& 2, Kanchenjunga Building, 18 Barakhamba Road, New Delhi-110001, India P : +91 11 23354046/47 F : +91-11-23354047 E : corporate@shardamaa.com W : www.shardamaa.com

DOMESTIC Govt mops up Rs 8,965 cr till Nov from auctioned, allotted coal blocks The government mopped up Rs 8,964.75 crore till last month from the auctioned and allotted mines, according to the coal ministry.

These revenue figures consist of upfront amount and monthly premium only, while royalty and taxes or cess are payable over and above these payments, the coal ministry said in its EBooklet on reforms.

Apart from 204 coal mines covered under the Coal Mines (Special Provisions) Act, the remaining blocks are allocated under the Mines and Minerals (Development and Regulation) Act.

18 | CCAI Monthly Newsletter December 2020

Till date, 11 coal blocks under the MMDR Act have been allotted to various government companies, where two blocks are for commercial purpose and the remaining nine are for captive end-use, it said.

In 2015, the central government brought in the Coal Mines (Special Provisions) Act to reallocate coal blocks cancelled by the Supreme Court in 2014.

The Act ensured continuity in operation of the producing mines and bringing into production other mines expeditiously. It also amended the Coal Mines (Nationalisation) Act and the MMDR Act, thereby bringing uniformity in provisions of all the three Acts governing coal block allocation.

Centre mulls barring non-serious players from future mineral auctions: Pralhad Joshi The Centre is considering bringing stringent provisions to bar non-serious players from future mineral auctions. Coal and Mines Minister Pralhad Joshi said that he is in talks with State governments to identify and bar those companies that have been delaying production and sabotaging the mineral auction process.

Speaking at the CII Global Mining Summit, Joshi said, “We are bringing changes in the next round of the mineral auctions to ensure that only serious players can participate. The government’s intention is to maximise revenue and production.”

Joshi said that the Centre had done its part by expediting the auction of mineral leases and transferring clearances. “The leases of a large number of working merchant mines were expiring in March 2020 and had to be auctioned immediately. Our government took a pro-active and industry-friendly step of transforming all the statutory clearances to the new leaseholders by promulgating an ordinance (the Mineral Laws (Amendment) Ordinance 2020). This was a major step to ensure a seamless and continuous supply of raw materials,” he said.

The Ordinance allowed transfer of existing clearances to new lease holders. This was done to ensure that there was no dip in mineral production for want of regulatory approvals. But according to Joshi, some mine-lease holders are not producing enough minerals despite having all approvals in place.

keting plans since the demand from the power sector, its main consumer, is yet to fully resurge.

“We are concentrating our efforts on non-power consumers to expand our sales volume. Till there is demand resurgence from power sector we shall follow this, which is helping us,” said a senior executive of the company.

The non-power consumers are showing a tendency to lift more coal. CIL’s supply to this sector has risen to 12.3 million tonnes in November this fiscal compared to 8.4 mts during November last fiscal, registering a 46% growth. The non-power sector’s lifting accounted for 24% of the month’s total despatch at 51.3 mts. The non-power sector predominantly consisting of cement, sponge iron, captive power plants and a host of other industries, progressively consumed 80.6 mts up to November, a growth by 14%.

The average loading per day to the non-power sector during the month marked a steep 59% growth at 40 rakes per day against 25 rakes the same month last year. The total rake loading during the referred month went up by 20% as CIL loaded 264 rakes per day against 220 rakes during November last fiscal.

The power plants are regulating their lifting and are not adhering to their earlier placed programme for rakes. Around 83 power plants have regulated lifting of coal in November, of which 26 have considerably reduced their programme placed for rakes against their entitlement. The remaining 57 have not filed their programme for rakes leading to a demand stagnation for the month, a CIL spokesperson said.

India makes future coal import CIL banks on supplies to non- disclosures mandatory India has made it mandatory for coal importers power sector to expand sales .

The average loading per day to the non-power sector during the month marked a steep 59% growth at 40 rakes per day against 25 rakes the same month last year.

The country’s power sector is stocked with 37.4 mts of coal, sufficient for 22 days.

PSU miner Coal India (CIL) is reorienting its mar-

to disclose future shipments, in a move seen as tightening screening to curb imports to protect domestic producers.

Importers of coking coal, steam coal and bituminous coal would have to gain a permit ahead of deliveries, the commerce and industry ministry said.

CCAI Monthly Newsletter December 2020

| 19

"The Coal Import Monitoring System (CIMS) shall require importers to submit advance information in an online system for import of items and obtain an automatic registration number," it said.

India's coal consumption was likely to rise in coming years, but it could vary widely, with 2030 demand seen anywhere between 1.15 billion tonnes and 1.75 billion tonnes.

The latest move for greater screening is aimed at pushing economic self-reliance to reduce imports and increase exports of value-added products by Prime Minister Narendra Modi's government, officials had told Reuters in September this year.

Government should not hoard mines, says Naveen Jindal He said India being a very competitive market, such scarcity leads to intense bidding and unsustainable valuation.

Jindal also said coal availability should improve and imports come down over the next five-ten years due to commercial mining. (File photo: IE) Jindal Steel and Power Ltd Chairman Naveen Jindal said the Union government should not “hoard” mines and create artificial scarcity, putting up only a few blocks for auction.

He said India being a very competitive market, such scarcity leads to intense bidding and unsustainable valuation.

There’s a need for speed in the race to digital: Sunil Jose, Senior Vice-President, Salesforce India MSI GE66 Raider: This laptop packs some serious power “Government has taken care of a lot of challenges, and commercial mining was a bold move…

It should help the sector… But, the government cannot hoard blocks and create artificial scarcity,” Jindal said at the Bengal Chamber of Commerce-organised virtual mining conclave.

“Royalty and taxes are the highest here in the world. Royalties are also not GST-compliant, and even coal cess of Rs 400 per tonne cannot be

20 | CCAI Monthly Newsletter December 2020

adjusted as input cost,” he said.

In June, Prime Minister NarendraModi had launched the auction process for 41 coal blocks for commercial mining.

Odisha CM Naveen Patnaik discussed with Union Ministers Pralhad Joshi, Dharmendra Pradhan on the issues auction of mines, mineral reforms Chief Minister Naveen Patnaik discussed with Union Minister, Coal, Mines and Parliamentary Affairs Pralhad Joshi and Union Minister, Petroleum, Natural Gas and Steel Dharmendra Pradhan and senior officials over video conference on the issues that have emerged from the recently conducted auction of mines, further mineral reforms and other issues related to Mineral sector in the State.

Chief Minister emphasized on further Mineral reforms to ensure uninterrupted supply of ore to industry and safeguarding the employment and State revenues. He said that Odisha has been one of the first State to successfully conduct auction of mineral blocks in accordance with the orders of Hon’ble Supreme Court.

However, there have been some glitches in commencement in mining operations leading to disruptions in production and dispatch leading to shortage of minerals for end user industries and price rise, he added.

Chief Minister emphasized that such disruptions and uncertainties in production and dispatch are undesirable, especially during these times. He said that shortages of ore and resultant high price has posed a challenge for the Sponge Iron plants, Small and Medium size Steel plants which has affected the revenues of the State and the employment of the people dependent on the sector.

Chief Minister requested the Union Government for an early decision on the issues discussed as the revenues of the State and employment of the people at large are involved.

STEEL

PHDCCI urges govt to extend quality control order for steel, steel products by 11 months In the statement, PHDCCI President Sanjay Aggarwal said the total demand of tinplate/tin free steel in India is around 6,50,000 tonnes, while the domestic availability is close to 4,00,000 tonnes. Therefore the gap in demand and supply is met through imports.

Industry body PHD Chamber urged the government to extend the Steel and Steel Products Quality Control Order (QCO) issued in July this year by another 11 months.

As per the order issued by the Ministry of Steel on July 17, 2020, foreign suppliers are required to take Bureau of Indian Standards (BIS) licence in order to supply tinplate/tin free steel products to consumers in India, PHD Chamber of Commerce and Industry (PHDCCI) said in a statement.

The order is valid for 9 months till April 17, 2021, the body said.

In the statement, PHDCCI President Sanjay Aggarwal said the total demand of tinplate/tin free steel in India is around 6,50,000 tonnes, while the domestic availability is close to 4,00,000 tonnes. Therefore the gap in demand and supply is met through imports.

Steel prices hiked for the second time in a week A second hike during the month, on the back of buoyant domestic demand, was largely anticipated since the domestic HRC prices, even after the first hike in December, were at a 6% discount to import parity prices from China. Analysts said there could be the third hike after an inevitable revision in the prices of iron ore in the next few days.

The steel prices in the domestic market have been moving northwards on the back of rising domestic demand.

Close on the heels of a stiff Rs 3,000/tonne increase in hot-rolled coil (HRC) prices effective from December 2, the domestic steelmakers have raised their benchmark product’s price by another Rs 2,200 per tonne. The latest price hike will be with effect from December 9.

A second hike during the month, on the back of buoyant domestic demand, was largely anticipated since the domestic HRC prices, even after the first hike in December, were at a 6% discount to import parity prices from China. Analysts said there could be the third hike after an inevitable revision in the prices of iron ore in the next few days.

Assam wants tea to go directly from gardens to globe, banks on six airports for agri exportsoil prices two years high, petrol prices in delhi, diesel prices in delhi, covid vaccine hope driving oil prices, OPEC, public oil marketing companies, BPCL, HPCL, IOCIndia's fuel demand drops 3.6% in November

Nitin Gadkari sees profiteering by cement and steel units The minister for MSMEs and highways Nitin Gadkari came down heavily on steel and cement industries for jacking up prices, without valid reasons.

The minister for MSMEs and highways Nitin Gadkari came down heavily on steel and cement industries for jacking up prices, without valid reasons.

Stating that these two industries appeared to take unfair advantage of the government’s initiatives to help businesses, Gadkari wondered what prompted steel firms to raise prices by 55% in the last six months. He indicated that commensurate increases were absent in the price of key inputs like power and raw materials.

Gadkari accused cement units of forming cartels to raise the prices of the building material, even as the construction industry is struggling CCAI Monthly Newsletter December 2020

| 21

to recover after being hit hard by the pandemic and the lockdown.

declines seen in the September-October period this year.

“I decided to make all roads concrete. I wanted to encourage the cement industry. But they are only taking (unfair) advantage of the situation and making cartels. So, I am now allowing bitumen (for road construction),” Gadkari at a Ficci event.

The report added, volumes are growing over 10 per cent YoY in North, East and Central India, while demand has remained weak in the South and Maharashtra.

The minister, however, said that there was nothing wrong for a businessperson to earn profit; in fact, that is her “fundamental right” since she is not in the business for “charity”, but there has to have reasons for raising prices. (ends)

Prices in Maharashtra are up by around 10 per cent at Rs 354 a bag, supported by higher prices in the South, which is a key supplier to the state.

The same for Gujarat remained steady QoQ (up 3% YoY) at Rs 350 a bag. As a result, prices in the West are currently up 1% QoQ (6% YoY) at Rs 352 a bag.

CEMENT

November freight loading rises 9%, nears January level

Cement prices in southern India rise 18% over strong production discipline

Transportation of automobiles by train surpassed last year’s figures by 39% Indian Railways (IR) has loaded 109.68 million tonnes (mt) of cargo in November this year, up almost 9 per cent against the corresponding month last year.

Loading of all commodities, barring coal, was higher during the month.

Cement prices in southern India grew by around 18% year on year, which is nearly double the prices in other regions of the country. The cement industry in the southern part of the country has exhibited strong production discipline in the face of weak volumes.

According to MotilalOswal, prices in South India have been strong and are up 18 per cent YoY (flat QoQ), while prices in North, West and Central India are up 7 per cent, 6 per cent and 5 per cent YoY, respectively, and 3 per cent, 1 per cent and 2 per cent QoQ, respectively. In Q3FY21, the average price is up 0.8 per cent QoQ so far across India versus a decline of 1.1 per cent and 0.7 per cent QoQ seen in the past 5-10 years.

The same is up by around 7 per cent YoY to Rs 360 a bag.

Led by hikes of around Rs 70-90 a bag (around 20%) in April-May 2020, prices in the south are still up Rs 60/bag, or 18% YoY to Rs 393 a bag in Q3FY21. On a QoQ basis, prices are flattish as hikes in November 2020 have neutralized the

22 | CCAI Monthly Newsletter December 2020

In November 2020, the Railways earned ₹10,657.66 crore from freight loading, 4 per cent higher compared to last year’s earnings for the same period (₹10,207.87 crore), Railway Board Chairman and CEO VK Yadav informed media in a web-conference here.

With this loading, the Railways continued the trend that started post-Covid-19 this fiscal when sequentially all months (barring August) loaded a higher quantum of cargo against the previous month.

Higher loading With this, the Railways is also climbing back to pre-Covid times of freight load.

It had loaded 110.19 mt of cargo in January this year, when the tracks were populated with both passenger and freight trains.

The higher loading was despite the festive month of Diwali when people went on leave; Punjab being cut-off from rails for 23 days during the month; and Cyclone Nivar.

GLOBAL Additional levy imposed on coal block allottees is penalty, can't be passed on to end consumers: APTEL Appellate Tribunal for Electricity (APTEL) recently held that the additional levy imposed on coal block allottees pursuant to the arbitrary allocation process was in the nature of penalty and could not be passed on to the end consumers (Jaiprakash Power Ventures Ltd vs MPERC &Ors).

M/s Jaiprakash Power Ventures Ltd (Appellant)

24 | CCAI Monthly Newsletter December 2020

had filed an appeal under Section 111 of the Electricity Act, 2003 against an order passed by the Madhya Pradesh Electricity Regulatory Commission.

Before the Commission, the Appellant had argued that the additional levy raised by the fuel supply company i.e Madhya Pradesh State Mining Corp. Ltd (MPSPCL) on the Appellant was recoverable as variable (fuel) charges from the procurers of electricity.

The additional levy was imposed pursuant to the direction of the Supreme Court cancelling several coal block allocations, and the provisions of

the Coal Mines (Special Provisions) Act, 2015.

The Supreme Court had requested the Central government to direct allottees to pay an additional levy of Rs 295 per MT of coal, towards financial loss caused to the exchequer by illegal and arbitrary allotments.

November to 56 million tonnes, higher 2.6 per cent month-on-month and 6.2 per cent year-onyear, driven by an improving domestic power demand by 3.7 per cent y-o-y.

Accordingly, domestic coal production continued to improve to 56.6 million tonnes, higher 11.6 per cent m-o-m and 2.2 per cent y-o-y.

The Appellant said that additional levy formed part of the landed cost of fuel under Regulation 41 of the MPERC (Terms & Conditions for determination of Generation Tariff) Regulations, 2012 and was, thus, recoverable from the customers.

Australia Gladstone port sends no coal to China in Nov

APTEL dismissed the appeal and held that the Commission was correct in holding that additional levy was a penalty which could not be passed through to the Discom and the consumers.

The Australian port of Gladstone in Queensland did not ship coal to China in November for the first month in nearly a decade, but exports stood at the second highest level this year as India and Japan led stronger buying.

Coal import prices volatile as China bans Australian import: Ind-Ra The indefinite Chinese ban on Australian coal imports will keep import prices for India volatile over the near term, according to India Ratings and Research (Ind-Ra).

Australia-origin coking coal import (comprising 67 per cent share in FY20) prices have remained subdued up to mid-December, providing respite to the spreads for domestic steel players while iron ore prices are soaring.

The import prices of non-coking coal from South Africa and Indonesia (comprising 85 per cent share in FY20) have seen a strong momentum up to mid-December, making imported coal more expensive and thus, hitting the margins of domestic power sector participants dependent on imported coal.

The Smart Electricity Conclave aims at providing a platform for digitalisation experts from around the globe to share best practices, chalk out a digital roadmap and act as a bridge between the industry and decision-makers for the success of Ind-Ra said coal offtake continued to improve in

.

Gladstone's exports to China often ease in September-October as annual import quotas to China fill, before rebounding in December ahead of the start of new quotas for the new year. This is the first time since January 2011 that Gladstone did not send any coal to China in a month, following China's imposition of an import ban on Australian coal in October as tension between Beijing and Canberra intensified.

Gladstone shipped around a third of hard coking, a third of semi-soft coking and a third of thermal coal in 2019 to global destinations, according to data from the Queensland government. Hard coking coal accounted for around a third of 11mn t that the port sent to China in 2019 and the rest was thermal coal, according to data from GTT. China purchased 10.1mn t of coal from Gladstone in January-November, compared to 9.63mn t as year earlier as it took more coal earlier in the year when other nations lowered imports.

Coal shippers hope that exports to China will pick up in December ahead of the renewal of the import quotas, as they have in previous years. It will signal a major change in Beijing's policy if they do not.

Despite the absence of buying from China, Gladstone shipped 6.24mn t in November, up by 7pc CCAI Monthly Newsletter December 2020

| 25

from October and 6pc on November 2019 and stood at the highest monthly level since January. The increase reflected increased shipments to India, Japan and South Korea, after these countries cut buying in the middle of 2020 because of domestic Covid-19 lockdowns.

Indonesia sets December HBA thermal coal price at $59.65/ mt,up 7.1% on month Indonesia's Ministry of Energy and Mineral Resources set its December thermal coal reference price – also known as Harga Batubara Acuan, or HBA – at $59.65/mt, down 10% year on year but up 7.1% on the month, according to a ministry official.

"The increasing demand from Japan, South Korea and India for Indonesian thermal coal shows improvements in their domestic industrial activities," the official said.

"Indonesia's commitment to increase its export to China has also strengthened positive sentiment for coal prices," the official added.

The ministry had set the price for November 2020 at $55.71/mt, and for December 2019 at $66.30/mt. The HBA is a monthly average price based 25% each on Platts Kalimantan 5,900 kcal/kg GAR assessments, Argus-Indonesia Coal Index 1 (6,500 kcal/kg GAR), Newcastle Export Index (6,322 kcal/kg GAR) and globalCOAL Newcastle (6,000 kcal/kg NAR).

In November, the daily Platts FOB Kalimantan 5,900 kcal/kg GAR coal assessment averaged $51.58/mt, up 1.9% from $50.63/mt in October.

The HBA price for thermal coal is the basis for determining the prices of 77 Indonesian coal products and calculating the amount of royalty producers have to pay for each metric ton of coal sold. It is based on 6,322 kcal/kg GAR coal with 8% total moisture content, 15% ash as received and 0.8% sulfur as received.

26 | CCAI Monthly Newsletter December 2020

Indonesia offers incentives to coal gasification plant State-owned Indonesian mining firm Bukit Asam's coal gasification plant in south Sumatra has been designated a national strategic project by the government, giving it preferential treatment for permit applications and tax waivers on land and building acquisitions to lower project costs.

This is a sign of the national government's commitment to accelerate the development of Indonesia's emerging downstream coal industry. The policy is also aimed at boosting investment in the sector, following the approval of royalty exemptions for coal that will be used for downstream purposes.

Preparatory work at Bukit Asam's plant is currently under way. Infrastructure construction is expected to start in mid-2021 with an expected target completion date of 2025. Once operational it will consume 6mn t/yr of coal to produce 1.4mn t of dimethyl ether that can be used as a substitute for LNG. Jakarta also listed the TanjungEnim industrial park in south Sumatra as a national strategic project. TanjungEnim is set to be the centre of Indonesia's downstream coal sector.

Indonesia targets coal output of 550 million tonnes in 2021 Indonesia has set its coal production target at 550 million tonnes for 2021, a figure unchanged from this year, due to the raging COVID-19 pandemic.

Coal business director Sujatmiko at the Ministry of Energy and Mineral Resources (EMR) told reporters at the 2020 Coal and Mineral Virtual Expo on December 10 that the target takes into account economic recovery, following the COVID-19 pandemic, for both the domestic and export markets.

Sujatmiko added that coal production had reached 513.6 million tonnes as of December 10 or 93 percent of this year’s target. The Indonesian government remains determined to meet this year’s coal production target, despite the lower demand.

The Indonesian Coal Mining Association (APBI) previously said it expected coal demand to really start recovering in the second half of 2021, assuming that most of the world successfully distributes a COVID-19 vaccine by that time.

Earlier this month, Indonesian President JokoWidodo ordered his cabinet ministers to set a target to reduce exports of unprocessed coal and accelerate plans to develop derivative industries for processing the fuel.

Cabinet clears pact between India, US for exchange of information in electricity sector The Union Cabinet approved a pact between India and the US for exchange of information in areas of mutual interest in the electricity sector.

"Union Cabinet, chaired by Prime Minister NarendraModi, has given its approval for the Central Electricity Regulatory Commission's (CERC) proposal for entering into an MoU...(with) the Federal Energy Regulatory Commission, United States of America, for exchange of information and experiences in areas of mutual interest," according to an official statement.

The memorandum of understanding (MoU) will help in improving regulatory and policy framework for developing efficient whole sales power market and enhancing grid reliability, according to the statement.

The activities to be carried out under the MoU include identifying energy-related issues and developing topics and possible agendas for the exchange of information.

It also includes to participate in seminars, visit and exchanges.

It provides for development of programmes of mutual interests and where appropriate hold these programmes locally to enhance participation.

It also includes that when practical and of mutual interest, provide speakers on energy issues and other personnel (management or technical).

South Africa tribunal approves South32 thermal coal operations sale South Africa's antitrust tribunal approved the sale of Australia's South32 S32.AX thermal coal business to Seriti Resources Holdings, clearing another hurdle in the miner's way to sealing the deal.

South32 announced the sale of South32 SA Coal Holdings Proprietary (SAEC) last year in November to begin its exit from energy coal, as investor pressure and climate change concerns prompt businesses to shift towards greener fuel sources.

The approval is contingent on Johannesburgbased Seriti meeting some conditions including employment terms and divestiture by SAEC of certain pending mining rights, the Competition Tribunal of South Africa said in a statement.

The deal has taken longer to close than anticipated, South32 said in October, and still needs to be approved by South African electricity generator, Eskom, the largest consumer of thermal coal in the country.

"While the transaction remains subject to material conditions, including approvals from Eskom, we continue to make progress in securing these and remain on-track to close during the March 2021 quarter," South32 Chief Executive Officer Graham Kerr said.

CCAI Monthly Newsletter December 2020

| 27

MONTHLY SUMMARY OF IMPORTED COAL & PETCOKE Indicative Imported Coal Price COAL

(kcal/kg)

Monthly Price - FOB

Monthly Price- FOB

Monthly Change (USD)

South Africa

6000 NAR

USD 90.65

INR 6671

22.46

South Africa

5500 NAR

USD 58.81

INR 4328

7.00

Australia

5500 NAR

USD 54.48

INR 4009

13.96

Indonesia

5000 GAR

USD 58.76

INR 4324

15.45

Indonesia

4200 GAR

USD 39.73

INR 2924

9.83

Indicative Pet Coke Price PET COKE

Sulphur

Price

Monthly Change

India-RIL(Ex-Ref.)

-5%

INR 9138

INR 1243.60

Saudi Arabia (CIF)

+ 8.5%

INR 7300 ($99)

12.20

USA (CIF)

- 6.5%

INR 7668 ($104)

14.20

Exchange Rate

Change (Monthly)

INR 73.59

-0.62

Indicative Coking Coal Price Premium Low Vol Current Month

Monthly Change (USD)

HCC 64 MID Vol

Semi Soft

CFR China FOB Aus

Low Vol PCI

Mid Tier PCI

FOB Aus

FOB Aus

MET COKE 62% CSR

FOB

CFR China

FOB Aus

101.55

190.45

93.43

173.53

78.85

82.65

80.65

345.40

386.20

-0.58

31.89

-1.04

30.40

15.85

10.46

10.46

38.90

53.32

28 | CCAI Monthly Newsletter December 2020

CFR India FOB N China

South African Coal News: * South Africa’s coal export has risen by 14% in November’20 based on increased buying spree by Pakistan, a report has revealed. South Africa’s thermal coal exports in November 2020 stood at 7.21 mn tonnes against 6.3 mn tones in October. The export has gone up by 7.8% y-o-y basis. While export to India, its main market has dropped off by 12% month on month, increased sales to Pakistan has made the figures look positive. * South African coal prices have surged to a 1.5-year high, of above USD 100/t, amid unexpectedly strong demand and diminishing stocks. According to latest assessment, Richards Bay index for higher-grade coal at USD107.69/t is up by more than 30% on the week and highest since July2018. * South Africa, which is often identified as Africa’s worst polluter, saw a 1.5% increase in carbon emissions last year, says a study published recently. Africa’s most advanced economy contributes about 33% of the continent’s steadily rising air pollution from fossil fuel combustion, oxidation, and cement production. * High Court in South Africa’s Pretoria set aside the environmental approval for the 1 200 MW Thabametsi coal-fired power station that would have been built in its first phase at 557 MW outside Lephalale in Limpopo province.

forecast to hit record A$123 bln.

*Australia’s coal producers may have to start cutting output if China maintains limits on imports from them, the Australian government said, forecasting a sharp fall in coal export revenue this year. Metallurgical coal export revenue seen down 35% this year while thermal coal volumes expected to fall about 7%. * The ban on Australian coal imports by China has impacted Australia's trade flows substantially.

According to consultancy firm wood mac, typical volumes to China are between 6 and 10 million tonnes (thermal and metallurgical combined) but the estimated shipments were only 0.4million tons in November. *China is set to allow a shipment of Australian coal into the country, according to a person familiar with the matter, despite a ban on such imports remaining in place as tensions between Beijing and Canberra escalate.

Indonesian Coal News:

* With international demand slowing, the government of Indonesia, a major coal producer and exporter, is looking to boost domestic demand for the fossil fuel. The government has recently passed a series of regulations seen as favourable to the coal industry, and is also putting its support behind coal producers.

Australian Coal News:

*Australian Government has forecast a sharp fall in coal export revenue in 2021 as the market has been deeply impacted. Metallurgical coal export revenue of the country has dropped 35% this year. Thermal coal volumes expected to fall about 7% in China hit. Iron ore export revenue

* Indonesia’s newly launched national energy plan aims to help one of Asia’s fastest-growing developing economies transition away from foreign-funded coal-power producers and towards liquefied natural gas and renewables.

In Bangladesh, a policy to scrap all future coal plants is up for the prime minister’s approval.

CCAI Monthly Newsletter December 2020

| 29

* Indonesia’s domestic coal consumption is estimated at140-145 million tonnes this year.

This is lower than this year’s target of 155 million tonnes but above last year’s consumption of 138 million tonnes. Indonesian2020 coal exports in the period to November stood at $14.8 billion. * In the wake of the Indonesian government setting the November average free on board (FOB) coal prices at $55.71 per tonne, up 9.2% from October’s FOB value, CIL has started talking to importers to find if they could meet their requirement through domestic coal. With the Indonesian thermal coal prices surging, Coal India (CIL) is looking at an opportunity to replace imported thermal coal with the domestic variety going by the government’s mandate of 100 million tonne (MT) of import substitution. *Indonesia’s Ministry of Energy and Mineral Resources set its December thermal coal reference price – also known as Harga Batubara Acuan, or HBA – at $59.65/mt, down 10% year on year but up 7.1% on the month, Ministry has said that the increasing demand from Japan, South Korea and India for Indonesian thermal coal shows improvements in their domestic industrial activities.

US Coal News:

* US coal buyers have modified their restocking strategies going into 2021 to reduce committed volumes from previously seeking more optionality in their contracts amid uncertainty around the ongoing Covid-19 pandemic, market sources say. * US low-volatile coking coal prices received another boost from strong Chinese demand as miners and suppliers seeking to wrap up deals ahead of the holiday season achieved new highs in China CFR deals.

30 | CCAI Monthly Newsletter December 2020

* The US Energy Information Administration forecast coal production of nearly 522 million st in 2020, down 26.1% from the 2019 output of 705 million t, the Energy Information Administration’s Short-Term Energy Outlook reported December 8. For 2021, the EIA projected output of about 624 million st, down 0.5%st from November’s forecast. Coal exports for 2020 were projected to total about 64 million st, down 31.2% from last year’s exports. Exports in 2021 are projected to be 67.5 million st. up 0.5% from the previous month’s projection. *40% of U.S. power generators are poorly positioned for a transition to a low-carbon economy because their business plans rely on coal and natural gas through 2025.

Pet Coke News: * The US petcoke markets were flat this week as demand has become low due to lack of supply and the upcoming holidays. According to analysts, the fundamentals say prices should drop, but inventories are so low that there’s no need to sell at a dropped price. * Trading in Indian delivered petroleum coke remained thin Dec. 9,despite small pockets of bidding activity heard, as buyers mostly turned toward US thermal coal as an alternative and supply in the US Gulf Coast remained tight, market sources said. Thermal coal remains the main source of fuel for the Indian power and cement sectors as buyers pivoted away from petcoke, traders said. “Indian cement companies are not talking about petcoke now, they are interested in US thermal coal,” an Indiabased petcoke analyst said. *The price of Green Petroleum Coke (GPC) from US gulf coast has gone up last month as its supply has continued to be remained tight in the US Gulf area especially after the Hurricane in

last August. Meanwhile, order for high-sulphur pet coke was also on the higher side in recent months causing its price to remain steady.

Shipping Update: * India’s maritime sector is set to go through sweeping reforms including the formation of a National Port Grid. The Minister of State for Ports, Shipping and Waterways, Mansukh Mandaviya, hoped these changes will bring more investments. India and several Gulf countries recently began collaborating in the maritime sector and such cooperation is expected to receive a shot in the arm with these reforms. *Already hit by the Covid pandemic, exporters in the region are battling against exponential rise in ocean freight and steel prices. They are of the view that these two factors are adversely impacting their margins and working capital.

The ocean freight has risen by 60 -100% since August this year. Exporters’ body Federation of

Indian Export Organisations (FIEO) has informed the government about an estimated $40-billion export loss in the current fiscal. * The new Merchant Shipping Bill drafted by the Central government has not specified the ownership pattern of entities who are allowed to register ships in India but this will be decided by rules prescribed after the bill is passed by Parliament and signed into law. * National Green Tribunal (NGT) has approved the ‘Beaching’ method of ship recycling in the world’s largest ship recycling cluster, at Alang, India, in November’20. NGT observed that the Alang Upgradation project would not impact the ecology much, and it has directed MoEF&CC committee to monitor compliance on the beaching method and compliance for Coastal Regulatory Zones (CRZ) Regulations at least twice a year.

CCAI Monthly Newsletter December 2020

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OVERALL DOMESTIC COAL SCENARIO Coal Production (in MT) Company CIL SCCL

November, 2020 51.69 4.91

November, 2019 50.03 5.44

% Growth 3.3% -9.7%

April-November, 2020 334.52 26.94

April- November, 2020 330.41 41.03

% Growth 1.2% -34.3%

Overall Offtake (in MT) Company

November, 2020

November, 2019

% Growth

April- November, 2020

April- November, 2019

% Growth

CIL SCCL

51.32 4.65

47.52 5.35

8.0% -13.0%

357.16 26.52

363.86 40.77

-1.8% -34.9%

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

November, 2020

November, 2019

% Growth

April- November, 2020

April- November, 2019

% Growth

CIL SCCL

39.38 3.90

39.12 4.62

1% -15.7%

277.46 22.37

292.88 34.44

-5.3% -35.0%

Company

Coal Qty. Allocated November, 2020

Coal Qty. Allocated November, 2019

Increase over notified price

Coal Qty. Allocated AprilNovember, 2020

Coal Qty. Allocated April- November, 2019

Increase over notified price

CIL

4.09

3.58

40%

25.78

16.17

21%

Spot E-auction of Coal (in MT)

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

Coal Qty. Allocated November, 2020

Coal Qty. Allocated November, 2019

Increase over notified price

Coal Qty. Allocated April- November, 2020

Coal Qty. Allocated April- November, 2019

Increase over notified price

CIL

1.38

4.05

33%

17.96

16.95

3%

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

Coal Qty. Allocated November, 2020

Coal Qty. Allocated November, 2019

Increase over notified price

Coal Qty. Allocated April- November, 2020

Coal Qty. Allocated April- November, 2019

Increase over notified price

CIL

0.60

0.00

24%

17.40

4.84

7%

Company

Coal Qty. Allocated November, 2020

Coal Qty. Allocated November, 2019

Increase over notified price

Allocated AprilNovember, 2020Coal Qty

Coal Qty. Allocated April- November, 2019

Increase over notified price

CIL

0.00

0.00

0%

2.29

0.66

13%

Coal Qty. Allocated April- November, 2019

Increase over notified price

Special Spot E-auction (in MT)

Special Spot E-auction Scheme 2020 For Import Substitution Company

CIL

Coal Qty. Allocated November, 2020

3.30

Coal Qty. Allocated November, 2019

0.00

32 | CCAI Monthly Newsletter December 2020

Increase over notified price

21%

Coal Qty. Allocated April- November, 2020

4.90

0.00

19%

PRODUCTION AND OFFTAKE PERFORMANCE OF CIL AND SUBSIDIARY COMPANIES COAL PRODUCTION (Figs in Mill Te) DEC'20

SUB CO. ACTUAL THIS YEAR

APR'20 - DEC'20

ACTUAL SAME % PERIOD GROWTH LAST YEAR

ACTUAL THIS YEAR

ACTUAL SAME PERIOD LAST YEAR

% GROWTH

-13.80

30.10

33.30

-9.80

ECL

4.20

4.90

BCCL

2.70

2.70

0.10

17.50

18.70

-6.10

CCL

7.30

6.40

13.20

39.80

39.20

1.50

NCL

10.50

9.60

9.40

84.20

79.60

5.80

WCL

5.50

6.00

-9.10

28.60

33.10

-13.40

SECL

14.00

13.90

0.50

90.70

95.20

-4.70

MCL

14.10

14.40

-1.80

101.90

89.20

14.20

0.00

0.20

392.80

388.40

NEC CIL

0.00 58.30

58.00

0.50

1.10

OFFTAKE (Figs in Mill Te) SUB CO.

DEC'20

APR'20 - DEC'20

ACTUAL ACTUAL THIS SAME % YEAR PERIOD GROWTH LAST YEAR

ACTUAL THIS YEAR

ACTUAL SAME PERIOD LAST YEAR

% GROWTH

ECL

3.10

4.60

-31.80

29.50

34.50

-14.50

BCCL

1.90

2.60

-25.60

16.90

20.80

-18.70

CCL

6.20

6.10

1.50

45.50

49.60

-8.20

NCL

10.10

9.80

3.10

79.70

79.90

-0.30

WCL

4.90

5.10

-4.50

33.20

36.90

-10.00

SECL

12.70

13.20

-4.10

98.50

101.40

-2.90

MCL

13.70

12.30

11.40

106.40

94.20

13.00

0.10

0.30

409.70

417.50

NEC CIL

0.00 52.60

53.70

-2.10

-1.90

CCAI Monthly Newsletter December 2020

| 33

Note

34 | CCAI Monthly Newsletter December 2020

REGISTERED

36