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From the Editor’s Desk
It is imperative that supply of coal rakes from BCCL and CCL would bring cheer to the power producers once Dhanbad-Chandrapura line becomes operational in February. Average 252.5 rak es are being supplied per day by CIL to the power sector and achieved an offtake growth of more than 7% compared to last year. Power plants are having inventory of approxim ately 13 days in the beginning of February. It is expected that CIL may put another 25-30 million tonne (mt) of coal under the hammer in the ongoing fiscal quarter. This decision is to pum p in more coal to the power sector via fuel supply agreem ents. SECL has also planned to take up seven coal blocks in various other States and 48 mines in Telangana to meet the growing coal demand fro m thermal power plants and oth er consumers. However, the production of CIL has increased by only 0.9% in January 2019 and offtak e fell by 2.3% compared to same month last year. Inspit e of best efforts made by CIL & Subsidiary Coal Companies, mo re than 5000 rakes are still pending in the non-lapsable category till end of January 2019. To meet the ongoing demand , India’s thermal coal impor ts jumped by19 % to 171.85 mi llion tonnes in 2018. This is the highest since 2014 though the Government wants to cut impor ts in a bid to reduce its trade deficit. Global coal demand is expect ed to remain stable through 2023 as developing economies increase their coal demand, negating decreases by indust rialized countries. Coal accoun ts for 27 percent of total global energy at present. IEA expect s that the demand may gradua lly decline from 27 percent to 25 percent, mainly due to growth in renewables and natural gas.
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Content Vol. XLVI No. 22 January 2019
06 Consumers’ Page
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
08 Power
Editor : Subhasri Nandi
12 Domestic
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.
16 Global
20 |In Parliament
27 |Energy Generation Report 28 |Monthly Summary Of Domestic Coal 30 |Overall Domestic Coal Scenario 31 |Monthly Summary Of Imported Coal & Petcoke
33 |Production And Offtake Performance Of Cil And Subsidiary Companies
CCAI Monthly Newsletter January 2019
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CONSUMERS’ PAGE Present Coal Scenario CIL has produced 57.2 mt coal in January 2019, a growth of only 0.9% compared to the same month last year. However, total production for the period of April 2018 to January 2019 is 469.65 mt, an increase of 6.6% compared to the same period last year. Offtake stood at 52.44 million tonnes in January 2019, down by 2.3% compared to the same month of 2018. Thus, total offtake for the period of April-January is 497.04 million tonnes, a growth of 4.6% compared to the same period last year.
Consumers’ Concern 1. Coal Stock Position Coal India has supplied 407 mt coal to the power sector till February 4 of current fiscal, achieving a growth of 7.3 per cent over the same period of last year. Average rake loading of CIL to the said sector, including loading from washery and good-shed, was 252.5 rakes per day. Coal supply may further increase because of the opening of Dhanbad-Chandrapura line. Thus incrased coal supply has resulted in building up of comfortable coal stock at thermal power plants. In the beginning of February, power plants are having more than 20 MT of coal stock which is sufficient for 13 days. This is an increase of 42 per cent over the stock of same period of last year.
2. Power Companies with and without PPAs have urged to start Auction under Shakti Scheme
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Power Plants without assured coal supply but with PPAs could not take part in Auction due to various reasons, have urged to commence Auction to provide them the opportunity to win long term supply assurance. Similarly, non-PPA holders have also requested for commencing Auction for them as per provisions of Shakti Scheme.
3. Coal Quality issues Inspite of best effort and continuous monitoring done by CIL & Subsidiaries, coal consumers are still facing the issue of quality variance in the grades allocated to them from Subsidiary Coal Companies of CIL. Though the quality has improved compared to the previous condition, consumers have expressed discontent over the grade variance mainly from ECL and BCCL. This problem also causes financial losses due to receipt of lower grade coal in comparison to the billed grades. Therefore, coal consumers have requested Coal Controller and CIL & its Subsidiaries to kindly intervene into the matter so that actual grade
of coal may be received as per the contracts from a few sources where grade slippages are occurring regularly.
4. Inordinate delay in sending referee samples There has been enormous delay in sending referee samples for 3rd Party Sampling & Analysis. Even the referee results and also the debit/credit notes are being received after 5-6 months from the date of challenge mostly from MCL and some are pending at CCL and SECL also, when standard delivery as per norms should be within 30 working days.
7. Request for extension of exemption in advance payment of coal value CIL has provided relief to its customers by extending the exemption in advance payment of coal value till March, 2019. Inspite of the best effort put by CIL and Subsidiary Coal Companies, more than 5000 rakes are still pending in the Non-lapsable category till beginning of February 2019 due to various reasons. This situation has added to the woes of CIL customers who are reeling under financial burden as their working capital is tied up with the Subsidiary Coal Companies and realisation through rail mode is extremely difficult. Therefore, consumers have requested CIL for extension of exemption pertaining to advance payment from April, 2019 for survival of the industrial sectors.
5. Dissatisfaction over coal sample collection procedure for 3rd Party 8. Framing of policy for making coal Sampling & Analysis available in case of non-availability Present procedure of coal sample collection and of contracted grade of coal from preparation for Third Party Sampling & Analysis is inadequate to get an accurate representative sample both the primary and secondary for a particular consignment. Therefore, it should be sources as per IS: 436 (Part 1/Section 1), 1964. As per BIS norms, in case of sampling from loaded wagons 25% of the total wagons are to be covered under sampling but as per FSA only 10% of total wagons are being considered for sampling for supply through rail mode. Third Party Agencies engaged for sampling are following the procedures as per FSA. Consumers opine that if BIS norms are adopted in case of 3rd Party Sampling, there will be less variation in the analysis results. In road mode also about 13% of the loaded trucks are covered under sampling as 3rd Party Agencies are taking samples from every 8th truck. Similarly consumers have requested that samples may be collected based on random table of BIS covering 25% of total trucks loaded under road mode for a day.
6. Less coal quantity received from different sidings through RCR mode from BCCL Power Sector consumers are constantly receiving less quantity of coal from KDS, Bhaga and a few other sidings while procuring through RCR mode from Bharat Coking Coal Limited (BCCL). Therefore, they have requested Railway Board to kindly intervene into the matter so that they may receive actual RR quantity from KDS, Bhaga and other sidings at the plant ends.
Industries under Non-Regulated Sector are adversely affected due to non-availability of contracted grade of coal from both the primary and secondary sources. Therefore, they have urged CIL for making necessary amendments in the existing and future Fuel Supply Agreements (FSAs) so that coal can be made available from other available sources based on mutual consent in case of non-availability of contracted grade of coal from both primary and secondary sources.
9. Highest premium charged by CIL Subsidiaries for conversion of Rail to Road/RCR mode Though CIL has allowed the conversion of linked and auction quantity from Rail to Road/RCR mode on a monthly basis for better evacuation but Subsidiary Coal Companies are adding clause to CIL notice according to which they shall charge the highest premium of any sub-sector in the last 2 concluded tranches under NRS Linkage Auction, for allowing Change of Mode. Consumers have urged that for Change of Mode from Rail to Road/RCR due to huge backlog in loading of rakes, the premium fixed during initial agreement should only be charged instead of additional premium being levied on the auction consumers. CCAI Monthly Newsletter January 2019
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POWER Unused thermal capacity, rising Modi government flagship Saubgreen power may cool spot en- hagya scheme achieves 95% tarergy prices get; universal electricity access High spot energy prices are unlikely to sustain in the close to reality medium terms as unutilised thermal power capacity and a spike in generation from renewable sources will weigh on.
A report on the outlook for the power sector by Icra says that high energy demand coupled with domestic coal shortages fuelled a surge in spot power tariffs in recent months. Sabyasachi Majumdar, Group Head & Senior Vice President, Icra, said, “The increased demand for electricity coupled with the shortfall in coal supply from domestic sources, has led to higher dependence on costlier coal imports in FY18 and FY19. The higher dependence on coal imports is augmented by the rising international coal prices and depreciation of rupee against dollar. The Indonesian coal price index has increased by about 16 per cent in 11 months of calendar 2018 on a y-o-y (year-on-year) basis. This has resulted in upward pressure on the cost of power purchase for the distribution utilities. Given this, augmentation of domestic coal supplies through both higher mining activity and improved rail infrastructure remains crucial for the sector from a cost control perspective.”
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Achieving 100% electrification in India has always been a prime focus area of the government, considering the development objectives such a step can secure and support. The last few decades have seen both the central and state governments put in the effort and resources to augment electricity access, especially in rural India, by initiating a number of schemes and programmes, such as the Rajiv Gandhi Grameen Vidyutikaran Yojana (RGGVY) and the Deen Dayal Upadhyaya Gram Jyoti Yojana (DDUGJY). In April 2018, the country achieved 100% village electrification—its first major milestone in this regard. This effectively means that now every village in the country has the requisite infrastructure and the network connectivity required to achieve the next major milestone, which is universal household electrification. Reflecting a well-planned and phased approach towards electrification, the Pradhan Mantri Sahaj Bijli Har Ghar Yojana, known as the Saubhagya scheme, was announced in October 2017, with the express aim of enabling 100% household electrification in the country by March 2019. Additional incentives were
available to those states who would achieve their electrification targets by the end of December 2018, and, in fact, many states have successfully managed to do so. At the time of its announcement, the scheme aimed to electrify over 30 million non-electrified households in India.
India needs hourly electricity tariffs: IEEFA With $100 billion of existing and proposed thermal power plants in financial distress and low cost but variable renewable energy capacity best able to meet targets, India has an opportune moment to transform its electricity sector by introducing day-ahead market pricing, the Institute for Energy Economics and Financial Analysis (IEEFA) said. A new IEEFA briefing note, “Flexing India’s energy system: Making the case for the right price signals through day-ahead market pricing”, finds the current pricing system in India is a largely flat tariff providing little incentive for network or consumer efficiency through load smoothing. Tim Buckley, co-author of the briefing note and IEEFA’s Director of Energy Finance Studies in Australasia, told IANS that the pricing system also does not incentivise the ramping up of flexible, peaking power generation capacity to meet peaks in demand. “India’s electricity generation and demand profiles have become ‘peakier’, meaning there is clearly more demand at certain times of the day such as evening or during hot weather periods,” Buckley said in a statement. “As India’s economy grows, this peakier demand will become even more apparent, putting stress on consumers, businesses and electricity generation systems currently struggling to meet those peaks.” The co-authors of the note found India’s increasingly obsolete sub-critical coal-fired power fleet is not flexible enough to viably meet growing demand peaks with a shift in generation pricing.
past 60 days get added, the figures would rise to over Rs 50,000 crore,” a senior official of a thermal power company said. In October 2017, the discoms’ dues to power-producing companies stood at Rs 31,676 crore, the data available on the PRAAPTI (Payment Ratification and Analysis in Power Procurement for Bringing Transparency in Invoicing of Generators) website showed. Outstandings of public sector thermal power companies amount to over 55 per cent of the total dues of Rs 39,498 crore on discoms. This includes outstanding of NTPC at Rs 15,661.31 crore, NHPC at Rs 3,011.67 crore and Damodar Valley Corporation at Rs 1990.59 crore.
Cabinet to decide soon on stressed power assets, says RK Singh The recommendations of a high-level empowered committee (HLEC) on stressed power assets will be placed before the Cabinet soon for approval, power minister RK Singh said. A group of ministers headed by finance minister Arun Jaitley is deliberating on the HLEC recommendations and deciding on their viability, Singh added. The recommendations of HLEC, headed by the Cabinet secretary, include a proposed mechanism through which REC and PFC — major lenders to discoms — can make upfront payment to independent power producers, allowing power plants which relinquish PPAs due to payment delays to use linkage coal for selling power elsewhere, and letting NTPC pool power from private plants for their existing PPAs for under-construction plants. As informed earlier, experts were sceptical about the extent of its impact due to the absence of any prescribed timeline. It was also silent on the long-standing demand of private power producers, seeking a government advisory for pass-through of additional cost of fuel procured through other sources for meeting the deficit of contracted linkage coal. This had led to 13 GW of generation units cumulatively losing out at least `2,500 crore since March 2017.
Discoms’ outstanding dues to power generators rise 24% to Rs NTPC to synchronise 800 Mw unit of Darlipalli thermal power 39,498 cr plant by March Amid stress in the power sector, woes of electricity generating firms have increased further as their outstanding dues on state distribution companies (discoms) rose to Rs 39,498 crore in October 2018, up 24.7 per cent from a year-ago levels, official data showed. “If the outstanding dues on discoms of the
NTPC Ltd, the country’s largest power generating utility plans to synchronise the 800 Mw unit of its 1600 Mw super thermal power station at Darlipalli, near Sundargarh, by March 2019. CCAI Monthly Newsletter January 2019
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“The turbine of the Darlipalli plant is ready. The boiler is expected to be completely fit for operations by February 10. We have already invested Rs 8,500 crore on the project whose total cost is pegged at around Rs 12,000 crore”, M P Sinha, regional executive director (East-II) said at a press conference here. Odisha will get 50 per cent power from this NTPC project. The Maharatna producer has already inked power purchase agreements (PPA) with states for the Darlipalli plant. Coal to feed the power plant, will be sourced from NTPC’s Dulanga coal mine. Any deficiency in coal requirement is to be met from Mahanadi Coalfields Ltd (MCL). The plant is expected to consume eight million tonnes of coal annually.
Renewable energy set to witness 10,000 Mw capacity addition in FY20: Report Renewable energy is set to witness 10,000 megawatt (Mw) in fresh capacity addition in FY20, aided by project awards from central agencies and state-owned distribution utilities. By FY20, the share of renewable energy (RE) to overall power generation is tipped to rise to 10 per cent and further to 13 per cent by FY22, a report by ratings agency Icra stated. Renewable energy installments during the April-December period stood at 5,060 Mw, taking the country’s cumulative capacity to 74,080 Mw. The share of RE-based generation in the overall generation mix at the all-India level is rising, as seen from an increase from 5.6 per cent in FY15 to 7.8 per cent in FY18. This is owing to the large-sized capacity addition witnessed in the wind and solar power segments during this period, driven by policy support from central and state governments as well as the significantly improved tariff competitiveness of wind and solar power vis-a-vis conventional power sources.
Solar projects: Power ministry government tightens timelines With frequent bid cancellations threatening to upset the solar capacity addition target, the power ministry has tightened the timelines for developers setting up solar projects. In its latest amendments to the guidelines for tariff-based competitive bidding of solar
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projects, the government lowered the time periods available to developers for submitting bids, making financial arrangements and setting up solar projects. According to the new amendments, solar developers would get 15 months to commission the plants after signing power purchase agreements (PPAs), if they are being built inside solar parks. Plants outside solar parks would have 18 months to be set up. The earlier timelines allowed in the original bidding guidelines charted in 2017 were 21 months for solar park projects and 24 months for plants elsewhere. Additionally, the amended guideline says that developers with projects inside solar parks would have to finalise their funding arrangements within nine months of signing PPAs. For projects outside solar parks, the statutory timeline for financial closure has been kept as 12 months, unchanged from the tenure prescribed in the original guideline.
Gujarat finds solar tariffs high, cancels auction The Gujarat government has cancelled the solar auction for 700 MW it held in December on the grounds that the winning tariffs reached were too high. The decision was conveyed to the winning developers at a meeting, attended by Gujarat’s additional chief secretary in the energy department, Raj Gopal, and officials of the Gujarat Urja Vikas Nigam Ltd (GUVNL), the agency which conducted the auction. Foreign players had won the entire 700 MW, with Softbank-backed SB Energy getting 250 MW at Rs 2.84 per unit, and Finland’s Fortum as well as France’s Engie getting 250 MW and 200 MW respectively at the same price of Rs 2.89 per unit. The previous auction for 500 MW held by GUVNL in September 2018 had seen the lowest tariff at Rs 2.44 per unit, and officials were unhappy over the sharp rise in just three months. Developers attributed the rise mainly to the high charges levied at the Raghanesda Solar Park in the state, where the projects have to be located, unlike the ones won in September, which could be put up anywhere in the state. They had welcomed the rise in tariff, claiming tariffs were finally becoming realistic after their sharp fall in the past three years.
DOMESTIC India’s 2018 thermal coal imports grew at fastest pace in 4 years: Report India’s 2018 thermal coal imports rose at the fastest pace in four years, according to two industry sources, despite moves by Prime Minister Narendra Modi’s government to cut imports in a bid to reduce its trade deficit. Coal is among the top five commodities imported by India, one of the world’s largest consumers of coal, and the rise in imports of the fuel after two consecutive years of decline adds to its trade deficit. Thermal coal imports jumped 19 percent to 171.85 million tonnes in 2018, the highest since 2014, according to data from American Fuels & Natural Resources. Thermal coal is mainly used to produce electricity. Imports of coking coal - which is mainly used in the manufacturing of steel - rose at the quickest rate since 2015 - according to consultancy firm Wood Mackenzie and American Fuels & Natural Resources, a trader of U.S. based coal. India imported 52.26 million tonnes of coking coal in 2018, up 14 percent from 45.93 million tonnes in 2017, the data showed.
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The value of all coal imports for the nine months ended December 31, 2018 was 31.4 percent higher at 1.38 trillion Indian rupees ($19.45 billion) than it was in the same period in 2017, according to government data reviewed by Reuters.
Coal supply to power plants grows 8%; coal stocks at plants up 35.6% Coal India Ltd has supplied 389.63 million tonnes coal to power sector during current year, registering a growth of 8% over the same period last year. Railway rake loading of CIL has increased by 8% during current year as compared to the same period last year, an official statement said. “The coal ministry has been in constant endeavor to maintain coal stock at sufficient level and increase coal supply to meet energy need of the country,” it said. As on January 22, 2019 power plants are having 18.663 million tonnes coal stock sufficient for 11 days. Last year on the same date it was 13.759 million coal stock sufficient for nine days. There has been an increase of 35.6% in coal stock at the power plants as compared to the same period of last year, the statement said.
Focus is on boosting coal pro- 52 coal mines opened in 5 years duction: Piyush Goyal to fuel power drive The current focus of the government is on boosting production from operational coal mines, according to Minister for Coal, Piyush Goyal. Responding to a query on the status of commercial coal mining, Goyal said, “We are focusing more on the end–use mines first because that is where immediately we have to get the excitement and get the people to get the coal mines. We are certainly considering some more relaxations.” Goyal said there has been an increase in coal consumption and transport. “The Railways has loaded 40 million tonnes more coal this year compared with the same period last year,” he said. According to the Ministry of Coal, all India production during April to November 2018 was 433.90 million tonnes. This was a growth of 9.8 per cent over the corresponding period of the previous year.
Coal India in talks with Gail, IOC for CBM JVs Coal India is in talks with Gail India and IOC for joint ventures to develop coal bed methane fields and sell the produce. Coal India has already lined up investments to the tune of Rs 3,000 crore for its methane projects. The joint ventures are also likely to enable Coal India inject coal bed methane into the proposed Urja Ganga gas pipeline that aims to meet energy requirements of 40 districts and 2,600 villages covering Uttar Pradesh, Bihar, Jharkhand, Odisha and West Bengal. In June last year, the Cabinet Committee on Economic Affairs had waived the requirement for procuring separate licences from the ministry of petroleum and natural gas for taking up coal bed methane projects on its lease hold areas. Following the development, the world’s largest coal producer lined up two coal bed methane projects at an estimated investment of Rs 3,000 crore. The first project will be undertaken by Coal India subsidiary, Bharat Coking Coal, at Jharia coalfields in Jharkhand. This block is estimated to hold methane reserves of 25 billion cubic meters and is expected to start production two years after the project is initiated.
The Narendra Modi government has opened 52 new coal mines since coming to power in May 2014 to fuel its flagship village and household electrification programmes without tripping the system, officials told. These 52 mines represent 86% growth over the number of mines added in the five-year period between 2009 and 2014, when most projects were stuck in red tape, especially pertaining to environment and forest clearances, before the NDA government took over. The officials said structural reforms in the government’s functioning since 2014 made it possible to quickly open such a large number of coal mines, a cumbersome process involving approvals and permissions from various statutory authorities. The new mines have added 164 MT (million tonne) to India’s annual coal production capacity, marking 113% increase over capacity added during the 20092014 period. Since 57% of power is generated in India by burning coal, these mines allowed the government to rapidly move towards universal electricity access without creating shortages.
SCCL plans Rs 10,000-crore capex, eyes new coal blocks, mines Public sector coal miner Singareni Collieries Company (SCCL) is planning a capital expenditure (capex) of Rs 10,000 crore to be invested over the next five years. The investment would cover acquisition of new coal blocks, expansion in new mines and setting up of power plants. The management has set a target of 85 million tonne (MT) of coal production by the end of 2022-23 from 62.01 MT achieved in 2017-18. SCCL has 47 coal mines and has cash reserves of Rs 6,000 crore. “During the past few years, Singareni Collieries has witnessed a rapid growth in terms of output, revenues and profit, putting the company into a profitable path. To sustain the growth momentum, SCCL is looking at expansion, taking up new mines in the state and coal blocks in other states,” chairman and managing director N Sridhar said. “SCCL will be taking up seven blocks in other states and 48 mines in Telangana to meet the power demands of the state and also the demand from other states. For this fisCCAI Monthly Newsletter January 2019
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cal, the capex earmarked is Rs 2,000 crore with coal production of 68 MT.”
SteeL Steel Ministry to set up Safety Directorate The Steel Ministry will soon set up a Safety Directorate that will oversee the safety standards in the steel industry. Speaking after the Parliamentary Consultative Committee meeting in Goa, Steel Minister Birender Singh said the safety directorate would be operational soon, an official statement said. Singh also said that a National Scrap Policy is also being drafted, which will be ready in a few months. This will make available nearly 7 million tonne scrap in the country. At present, the requirement of scrap is around 8.3 million tonnes and most of it is met with scrap imports.
CEMENT Cement Manufacturers’ Association, trade unions reach new wage pact Cement Manufacturers’ Association (CMA) and Federation of major Central Trade Unions (INTUC, AITUC, BMS, HMS, and CITU & LPF) have signed a Memorandum of Understanding agreeing on an increase in gross pay, enhanced dearness allowance and service weightage. The present MOU is for a duration of four years from April 1, 2018 to March 1, 2022. It provides for an increase of Rs 5,000 per month in the Gross Pay of cement employees (to be paid in two instalments of Rs 2,500 each with effect from April 1, 2018 & April 1, 2020). The MOU also provides for enhanced Dear-
14 | CCAI Monthly Newsletter January 2019
ness Allowance, Service Weightage benefits and other benefits. Arrears for 10 months will be paid in two installments. The MOU was reached between CMA and the representatives of Central Trade Unions in Chennai on January 21. The MOU will be converted into a Memorandum of Settlement before the Chief Labour Commissioner (Central), New Delhi in due course. Large manufacturers including India Cements, Ultra Tech, Ramco Cements, Dalmia Cement, Chettinad Cement. Zuari Cement, JK Lakshmi Cement and Century Cement are part of the agreement
RAILWAYS ‘Indian Railways geared to meet competition and rising demand’ A focus on increasing the rail capacity for freight and passengers, remodeling more trains for shortdistance passenger traffic, and more electrification are some of the strategies that the Indian Railways is adopting, said Girish Kumar Pillai, Member-Traffic, Railway Board, while speaking at the release of an IEA-UIC report, ‘The Future of Rail’. The future of rail depends on how it meets the rising transport demand and increasing pressure from competing transport modes, said the IEA (International Energy Agency) and UIC (International Union of Railways) report. The Railways is following a strategy to meet the high unmet demand. “Building rail transport capacity has a high time lag due to longer gestation period in building infrastructure projects and in land acquisition. So priority is given to augment the capacity of trunk routes,” Pillai said. In India, passenger services take two-thirds of rail capacity and one-third goes to freight. In terms of revenues, it is the reverse, with freight accounting for two-thirds of revenue.
GLOBAL Trump administration has a new Lowest Level Since 1979 plan to prop up dying coal indus- Contrary to popular belief, the United States is using less coal than ever before – and in 2018, coal usage try reached its lowest level in almost 40 years. As coal continues its irreversible decline, the Trump administration keeps trying new ways to prop up the industry. In the administration’s latest effort to help the coal industry, the Department of Energy (DOE) is providing up to $38 million in funding for research into improving the performance and reliability of the nation’s existing coal-fired power plants. The DOE’s decision to boost research funding for existing coal-fired power plants comes as coal’s share of the nation’s generation portfolio remains on the decline. In 2007, 28 states relied on coal as their primary electricity source. In 2018, coal is the top source for power generation in only 18 states. Efforts by the Trump administration to reverse the diminishing fortunes of the coal industry are also occurring at a time when climate scientists are warning governments around the world to develop policies that will drastically reduce emissions from the burning of coal and other fossil fuels.
US Coal Consumption Drops to 16 | CCAI Monthly Newsletter January 2019
After reaching its peak in 2007, coal usage has been in sharp decline as safer and more efficient energy sources take on more substantial roles on the American electrical grid. According to a recent report from the U.S. Energy Information Administration, coal usage fell by 4% in 2018, which is the lowest it has been since Jimmy Carter’s presidency in 1979. Natural gas, an energy source that releases 50% to 60% less carbon dioxide emissions than coal, surpassed coal as the leading source of U.S. electricity generation in 2016. The increased use of natural gas, along with renewable energy sources such as solar and wind, have led economists and analysts alike to predict a significant decrease in coal usage by 2050. Tougher pollutant restrictions are partially responsible for coal’s decline, but the main reason for coal’s decline may have more to do with economics than with regulation. The report states that “coal demand in the power sector is sensitive to changes in the price of natural gas,” meaning that whenever natural gas becomes less ex-
pensive, demand for its use increases, resulting in a decreased demand for coal.
South Africa’s RBCT says 2018 coal exports fall South Africa’s Richards Bay Coal Terminal (RBCT) said 2018 coal exports fell to 73.47 million tonnes from its record high of 76.47 million tonnes in 2017, on lower exports to South Korea. Africa’s largest coal export facility said it aimed to export at least 77 million tonnes of coal in 2019, the same as its 2018 target. “The markets are a reality, they are outside RBCT’s control,” said Nosipho Siwisa-Damasane, RBCT chairwoman. Asia took the bulk of the coal exports, with a share of 81.6 percent of all exports in 2018 while Europe took 10.1 percent of the exports. RBCT said it experienced port closures of 36 days in 2018 compared to 38 days in 2017 due to weather conditions.
coal prices in northern China’s major ports, stood at 569 yuan (around 82.91 U.S. dollars) per tonne, down from 570 yuan week on week, according to Qinhuangdao Ocean Shipping Coal Trading Market Co. Ltd. The price was also 1.39 percent lower than that of the same period a year ago. Analysts said the power coal price was under pressure and market expectations stayed bearish. Renewed customs clearance quota for coal imports in 2019 will unleash abundant supplies from abroad, and coal stockpiles in coal-fired plants, although likely to fall below 16 million tonnes soon, were still substantially higher than a year ago. China is in the middle of capacity cutting in its overloaded coal sectors.
Indonesia sets lower coal production target to help stabilize China December coal output ris- global price es about 2 percent to highest in The government has lowered its coal production target for this year to 480 million tons in an effort to staover three years bilize the global coal price, an official has said. China’s December coal output climbed 2.1 percent from the year before, government data showed, hitting the highest level in at least three years as major producers ramped up production amid robust winter demand and after the country started up new mines. Miners produced 320.38 million tonnes of coal in December, according to data released on Monday by the National Bureau of Statistics. That is the highest level on records going back to March, 2016. China approved more than 45 billion yuan’s ($6.64 billion) worth of new coal mining projects last year, much more than 2017, official documents show. The new projects contributed to bigger output last year, with annual production in 2018 rising 5.2 percent to 3.55 billion tonnes, the highest since 2015
China’s benchmark power coal price inches down China’s benchmark power coal price dropped slightly during the past week as a large amount of imported coal is about to enter the market and domestic inventory remains high.
Last year’s target was 485 million tons, 25 percent of which was allocated to the domestic market obligation (DMO). Energy and Mineral Resources Ministry mineral and coal director general Bambang Gatot Ariyono said the government considered various factors before deciding on the figure, including the movement of the US dollar. “The goal is to maintain a good coal price,” he said, adding that there were possibilities that the government might revise the production target this year. “We will continue to oversee the situation. Usually, coal miners will revise their production target no later than July.” One of the reasons to revise the target was to increase state revenue, he added. Ministry data from up to Dec. 27 shows that Indonesia reached 94.02 percent of its annual total target for 2018. Bambang assured that a 25 percent DMO policy and a coal price cap of US$70 per ton would ensure stable electricity tariffs until the year-end.
The Bohai-Rim Steam-Coal Price Index, a gauge of
CCAI Monthly Newsletter January 2019
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Coal expected to be Australia’s most valuable export in 2018-19 Coal is expected to become Australia’s most valuable export for the first time in nine years in fiscal 2018 ending June this year, as increasing concentration in the mining industry pushes up prices and exports to China and other countries in Asia rise. Australia will export 67 billion Australian dollars ($47.8 billion) of coal in fiscal 2018, compared with AU$63.8 billion for iron ore, according to the “Resources and Energy Quarterly” report for December published by the country’s Department of Industry, Innovation and Science. Coking coal exports are forecast to rise 8.7% from fiscal 2017 to AU$41.1 billion, while thermal coal exports are expected to jump 14.6% from fiscal 2017 to AU$25.9 billion. Thermal coal, which emits a lot of greenhouse gases
18 | CCAI Monthly Newsletter January 2019
as a power source, is not a favorite with environmentalists and policymakers. British-Australian mining giant Rio Tinto sold off its remaining coal assets in August 2018, while Japanese trading houses Mitsubishi Corp. and Mitsui & Co plan to sell their stakes in thermal coal mines, perhaps as early as this year.
Australia’s Whitehaven Coal says 2nd qtr production rises Australia’s largest independent coal producer Whitehaven Coal said its second quarter saleable coal production rose 11 percent as a timely pickup in production from its Narrabri mine bolstered output. Managed saleable coal production for the three months to Dec. 31 came in at 5.6 million tonnes, compared with production of 5 million tonnes a year ago, the company said in a statement. However, the miner’s sales fell 7 percent for the quarter. (Reporting by Shanima A in Bengaluru; additional reporting by Ambar Warrick; editing by Chris Reese)
With Best Compliments From:
Sharda Ma
( )
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
IN PARLIAMENT GOVERNMENT OF INDIA MINISTRY OF COAL LOK SABHA Q. No. 3512. COAL MINERAL ROYALTY 02.01.2019 SHRI PRAHLAD SINGH PATEL: Will the Minister of COAL be pleased to state : (a) the time since when the coal mineral royalty has not been reviewed; (b) the losses suffered by the State Governments on that account, State-wise; (c) whether the Government has made any arrangement for compensation of the same; and (d) if so, the time by when the new royalty rate of coal which is being planned is likely to be announced? ANSWeR MINISTER OF RAILWAYS AND COAL (SHRI PIYUSH GOYAL)
20 | CCAI Monthly Newsletter January 2019
(a): The rates of royalty on coal and lignite were last revised vide notification no G.S.R. 349(E) dated 10.05.2012 vide which the rates of royalty on coal was made ad valorem @ 14% on price of coal, except for the State of West Bengal. (b) & (c): Due to ad-valorem nature of rates of royalty, there is increase in revenue to the coal producing States as and when the price of coal increases. Therefore the question of losses to the State Governments on this count and compensation for the same does not arise. In addition to Royalty, after amendment of MMDR Act in 2015, an additional amount in the form of District Mineral Fund (DMF) has started to accrue to the State Governments. 30% of the amount of royalty in respect of mining leases granted before 12th January, 2015 and 10% of the royalty in respect of mining leases granted on or after 12th January, 2015 is being collected by the State Governments as District Mineral Fund (DMF).
(d): As regards revision of the rates of royalty on coal and lignite, 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 refereed to Study Group for reconsideration of its recommendation. The Study Group has made its recommendations which are under consideration of the Government.
The imported coal quantity of 2017-18 at 208.27 MT is less than the imported quantity of 2014-15 which stood at 217.79 MT even as power generation and industrial activities grew substantially after 2014-15. (b): There has been a consistent effort to increase domestic coal production so as to reduce dependence on coal imports. The all India raw coal production has increased from 565.77 MT in 2013-14 to 676.48 MT in 2017- 18. Absolute increase in all India coal production from 2013-14 to 2017-18 (four years) is 110.71 MT as compared to increase of coal production of 33.73 MT from 2009-10 to 2013-14 (four years).
Q. No. 3633. COAL PRODUCTION AND IMPORT
Coal India Limited (CIL) has also increased its production from 462.41 MT in 2013-14 to 567.36 MT in 2017-18 (four years), an absolute increase of 105 MT as compared to increase of coal production of 31.15 MT between 2009-10 and 2013-14 (four years). Further, in the current year during April-November, 2018, all India coal production was 433.90 MT with a growth rate of 9.8% and coal production of CIL was 358.32 MT with a growth rate of 8.8% over the corresponding period of previous year.
02.01.2019 KUNWAR BHARATENDRA: Will the Minister of COAL be pleased to state: (a) the details of quantum of coal, imported from different countries of the world country-wise; and (b) the steps taken by the Government to boost domestic production and to cut down import of coal? ANSWeR MINISTER OF RAILWAYS AND COAL (SHRI PIYUSH GOYAL) (a): The details of country wise import of coal during the year 2017-18 and current year 2018-19 upto October, 2018 is given below:Import of Coal (Qty. in MT) 2017-18
2018-19@
Quantity
Quantity
Indonesia
95.814
59.773
Australia
46.145
28.855
South Africa
38.493
19.394
U.S.A
12.032
10.008
New Zealand
0.602
0.252
Country
Canada
3.562
2.342
Mozambique
5.914
4.046
Russia
4.297
2.477
Others
1.414
5.981
Total
208.273
133.128
Source: CCO Reports.
@ Upto October, 2018
The focus of the Government is on increasing domestic production of coal which includes efforts to expedite Environment & Forest clearances expeditiously, pursuing with State Government for assistance in land acquisition and coordinated efforts with Railways for movement of coal. However, coking coal will continue to be imported as there is limited availability of coking coal in the country. Further, power plants designed on imported coal will also continue to import coal. Q. No. 3735. COStLIeR COAL IMPORtS 03.01.2019 SHRI A. ARUNMOZHITHEVAN: Will the Minister of POWER be pleased to state: (a) whether the recent rise in energy demand in the country has improved off take from the power generators but has also resulted in higher dependence on costlier coal imports as the supply of the dry fuel from domestic sources was insufficient; (b) whether the all India electricity growth remained steady at 5.6 per cent during the first five months
CCAI Monthly Newsletter January 2019
| 21
period of financial year 2018-2019, if so, the details thereof; (c) whether the increased demand is being met from higher generation by both thermal and renewable energy plants; and (d) if so, the details thereof? ANSWeR THE MINISTER OF STATE (INDEPENDENT CHARGE) FOR POWER AND NEW & RENEWABLE ENERGY ( SHRI R. K. SINGH ) (a) & (b) : There is an average growth of 5.8% in all India energy supplied during 2018-19 (upto September, 2018) as compared to 2017-18 (upto September, 2017). The electricity growth during September, October and November, 2018 has been 7.1%, 11.8% and 5.2% respectively and during the current year 201819 (upto November, 18) has increased to 6.6%. Thus, the recent rise in energy demand in the country has improved off take from power generation. But due to improved availability of coal from domestic sources, the dependence on coal imports have not increased and remained almost same as last year. The import of coal for blending with domestic coal during current year 2018-19 (upto November, 2018) was 39.1 Million Tonne (MT) which was almost same as the import of 38.8 MT during the same period last year. (c) & (d) : Yes, Madam. The generation from thermal and renewable energy sources during current year, 2018-19 (upto November, 2018) was 715.418 Billion Unit (BU) and 81.149 BU respectively as compared to 681.284 BU and 70.022 BU respectively during the same period last year.
Q. No. 3789. COAL PRICE 03.01.2019 SHRI DHARMENDRA YADAV: DR. PRITAM GOPINATH MUNDE: SHRI ANANDRAO ADSUL: SHRI ADHALRAO PATIL SHIVAJIRAO:
22 | CCAI Monthly Newsletter January 2019
Will the Minister of POWER be pleased to state: a) whether coal based power plants are facing the heat of increased prices of thermal grade coal and cost of railway freight; b) if so, whether the Investment Information and Credit Rating Agency of India has done any study in this regard; c) if so, the details thereof; d) whether the percentage of price of thermal grade coal and the percentage of cost of freight has increased recently; e) if so, the impact of the cost of the said thermal power plants on the increase in production; f) whether the thermal power plants were operating with low production due to rising demand of non-renewable energy; and g) if so, the details thereof? ANSWeR THE MINISTER OF STATE (INDEPENDENT CHARGE) FOR POWER AND NEW & RENEWABLE ENERGY ( SHRI R. K. SINGH ) (a) & (d) : Coal India Limited, vide notification dated 01.2018, has revised the price of all grades of noncoking coal produced by coal companies of CIL superseding their earlier price notification dated 29.5.2016. The price of higher grade of coal (G1 to G5) has been reduced by 0-5% whereas the price for other grades (G6-G14) has been increased in the range of 3 to 22%. The details of coal freight rate per tonne from 2014 to 2018 is as under:
Distance (in KM)
25.06.2014
01.04.2015
22.08.2016
26.07.2017
15.01.2018
01.11.2018
Freight rate per tonne (in Rs.) 100
193.40
164.50
164.50
179.00
198.70
216.00
500
660.60
702.40
712.00
817.60
969.80
1054.70
1000
1269.20
1349.50
1349.50
1455.10
1739.60
1891.80
1500
1873.40
1992.00
1961.20
2066.80
2478.20
2695.00
2000
2350.80
2499.70
2243.40
2349.00
2819.00
3065.70
& (c) : The report titled “Revision in domestic coal prices and railway freight rates to raise power procurement cost by 11 paise per unit for distribution utilities” available in ICRA website concludes that: “Assuming the average AT&C loss level at around 23% in the country, the impact of the revision in coal prices and railway freight on cost of power supply per unit sold and retail tariffs (assuming full pass through by state regulators) is estimated at around 14 paisa per unit or 2.3% tariff hike. However, the state-wise extent of an increase in the cost of power supply and hence, in retail tariff for a distribution utility would be dependent upon the mix of coal based generation in its overall power procurement.” (e): The thermal power plants are operating consistently at Plant Load Factor (PLF) of about 61% during 201718 as well as during 2018-19 (April-November, 2018). Moreover, the generation from coal based thermal power plants has increased by about 5.5% during April-November, 2018 as compared to same period last year. (f) & (g) : The PLF of the stations varies from 94.86% to 0 during 2018-19 (upto Nov. 18). The PLF of the station depends on number of factors like the outages for planned maintenance, forced outages on account of equipment failures, coal shortages etc. and actual dispatch to the station by the beneficiaries. The actual dispatch depends on the prevailing electricity demand, availability of electricity from other different sources like hydro, nuclear and renewable etc. and merit order of the station based on its variable cost of supply.
CCAI Monthly Newsletter January 2019
| 23
GOVERNMENT OF INDIA MINISTRY OF COAL RAJYA SABHA Q. No. 2614. TOTAL PRODUCTION OF COAL 04.01.2019 SHRI ANIL DESAI: Will the Minister of COAL be pleased to state: (a) the total coal production in the country for the last five years; (b) the demand of coal during the same period; and (c) whether there is any dependency on import of coal, if so, the details thereof and the expenditure incurred thereon? ANSWeR MINISTER OF RAILWAYS AND COAL (SHRI PIYUSH GOYAL) (a)to(c): The all India demand of coal, production and import of coal during last five years is given below:Year
2013-14
2014-15
2015-16
2016-17
2017-18
Total demand (Mte)$
769.69
787.03
822.36
884.87
908.40
Total domestic
565.77
609.18
639.23
657.87
676.48
Total Import (Mte)
166.86
217.78
203.95
190.95
208.27
Value of Import (in Rs. Crores)
92329
104507
86034
100231
138477
Production (Mte)
$ All India demand estimated by NITI Aayog. The imported coal quantity of 2017-18 at 208.27 MT is less than the imported quantity of 2014-15 which stood at 217.79 MT even as power generation and industrial activities grew substantially after 2014-15. The entire demand of coal is not met from domestic production as the supply of high quality coal/ coking coal (low-ash-coal) in the country is limited and thus no option is left but to resort to import of coking coal. As per the 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 their contractual prices on payment of applicable duty. There has been a consistent effort to increase domestic coal production so as to reduce dependence on coal imports. The all India raw coal production has increased from 565.77 MT in 2013-14 to 676.48 MT in 2017-18. Absolute increase in all India coal production from 2013-14 to 2017-18 (four years) is 110.71 MT as compared to
24 | CCAI Monthly Newsletter January 2019
increase of coal production of 33.73 MT from 200910 to 2013-14 (four years). Coal India Limited (CIL) has also increased its production from 462.41 MT in 2013-14 to 567.36 MT in 2017-18 (four years), an absolute increase of 105 MT as compared to increase of coal production of 31.15 MT between 2009-10 and 2013- 14 (four years). However, coking coal will continue to be imported as there is limited availability of coking coal in the country. Further, power plants designed on imported coal will also continue to import coal. Q. No. 2615. IMPORT OF COKING COAL 04.01.2019 SHRI N. GOKULAKRISHNAN : Will the Minister of COAL be pleased to state: (a) whether coking coal comprises 21 per cent of the country’s coal import and that cannot be controlled due to unavailability of the product in the country; (b) whether 15 per cent of coal is imported by power plants because of the design, which only permits to operate on imported coal with low-ash content; (c) whether in the April-November, 2018 period, the total coal production in the country was 434 million tones, which was 9.8 per cent higher than the corresponding period last year; and (d) if so, the details thereof? ANSWeR MINISTER OF RAILWAYS AND COAL (SHRI PIYUSH GOYAL) (a): Against the country’s total import of coal of 208.27 MT during 2017-18, import of coking coal was 47.00 MT which is about 22.6 per cent of total import of coal.The entire demand of coking coal is not met from domestic production as the supply of high quality coal/ coking coal (low-ash-coal) in the country is limited and thus no option is left but to resort to import of coking coal. As per the 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 their contractual prices on payment of applicable duty. (b): As per CEA report, the total capacity of imported coal based power plants (as on 31.3.2018) was 18130 MW. Against the annual program of 46 MT, total import by these power plants was 39.40 MT in 2017-18 which constitutes 18.9% of the total imports.
Besides, 17.04 MT of coal had also been imported by the power plants for blending in 2017-18 (CEA report). (c)&(d): Yes, Sir. During April-November, 2018, all India coal production was 433.90 MT which was 9.8 per cent higher than the corresponding period of last year. Q. No. 2616. ALLOCAtION Of COAL MINeS IN ChhAttISGARh, JhARkhAND AND ODIShA 04.01.2019 MS. SAROJ PANDEY: Will the Minister of COAL be pleased to state: a) whether new coal mines have been allocated to private or public sector in Chhattisgarh, Jharkhand and Odisha during the last four years; and b) if so, the new coal mines for which mining has been permitted and by when the production in these coal mines is likely to be started along with the details thereof, State-wise? ANSWeR MINISTER OF RAILWAYS AND COAL (SHRI PIYUSH GOYAL) (a) & (b): So far, 55 Coal Mines have been allocated under the provisions of Coal Mines (Special Provisions) Act, 2015 [CM(SP) Act, 2015] in the States of Chhattisgarh, Jharkhand and Odisha (out of the originally allocated 59 Coal Mines in these States, Allotment Agreement/Coal Mine Development and Production Agreements (CMDPA) have been terminated in respect of 4 Coal Mines). Mine Opening Permission has been granted for 14 mines located in the States of Chhattisgarh, Jharkhand and Odisha. Details of these 14 mines are at Annexure. So far, 15 Coal Blocks have been allocated under the provisions of Mines and Minerals (Development and Regulation) Act, 1957 [MM(DR) Act, 1957] in the States of Chhattisgarh, Jharkhand and Odisha. All these blocks were regionally explored at the time of their allocation. At present, these are not in operation. Operationalization of these coal blocks may occur after 38 months (in case of non-forest land) or 44 months (in case of forest land) from preparation of GR as per timelines of allotment agreement.
CCAI Monthly Newsletter January 2019
| 25
Annexure
Specified End-Use
Name of Allocatee
Allotment/ Vesting Date
Date of Mine opening Permission
Scheduled Date of operationalisation as per timelines
Parsa East & Kanta Basan
Power
Rajasthan Rajya Vidyut Utpadan Nigam Ltd.
01.04.15
01.04.15
01.07.15
3
Talaipalli
Power
NTPC Ltd.
08.09.15
31.01.18
08.05.19
4
Chotia
NRS
Bharat Aluminium Company Ltd.
01.04.15
20.11.15
01.07.15
5
Gare Palma IV‐5
NRS
Hindalco Industries Ltd.
01.04.15
20.11.15
01.07.15
NRS
Hindalco Industries Ltd.
01.04.15
12.11.15
01.07.15
S.No.
Name of Coal Block
1-2
State
Chattisgarh
6
Gare Palma IV‐4
7
Gare Palma IV‐8
NRS
Ambuja Cement Ltd.
22.04.15
26.04.18
22.12.18
8-9
Chatti Bariatu, Chatti Bariatu South
Power
NTPC Ltd
08.09.15
14.11.17
08.05.19
10
Kathautia
NRS
Hindalco Industries Ltd.
01.04.15
24.02.17
01.07.15
11
Pachhwara North
Power
01.04.15
07.12.18
01.07.15
12
Manoharpur
Power
Odisha Coal & Power Ltd.
31.08.15
28.08.18
13
Dulanga
Power
NTPC Ltd.
08.09.15
28.02.18
08.05.19
Power
GMR Chhattisgarh Energy Ltd.
23.03.15
03.07.15
01.07.15
Jharkhand
West Bengal Power Development Corp. Ltd.
30.04.19
Odisha 14
Talabira-I
NRS- Non-Regulated Sector
26 | CCAI Monthly Newsletter January 2019
CCAI Monthly Newsletter January 2019
| 27
6780
70.26
Source CEA
TOTAL
BHUTAN IMP
HYDRO
59.71
59.71
60.54
14
13
NUCLEAR
ACTUAL*
DEC-2018
1265000
5000
130000
38500
1091500
2
PROGRAM
275152.07
0
THERMAL
Category
TOTAL
BHUTAN IMP
45399.22
NUCLEAR
HYDRO
222972.85
1
107240
317
6997
3377
96549
3
PROGRAM
100359.11
53.09
7080.53
3011.93
90213.56
4
ACTUAL*
80.3
62.15
15
ACTUAL SAME MONTH 2017-18
101864
81.99
6611.78
4050.81
91119.42
5
ACTUAL SAME MONTH 2017-18
JAN-2018
64.75 98.52
93.58
65.36
59.09
16
PROGRAM
63.2
61.06
17
ACTUAL*
107.09
74.35
99.01
7
% OF LAST YEAR (4/5)
63.87
59.28
18
ACTUAL SAME PERIOD 2017-18
1058116
4647
114963
31010
907496
8
PROGRAM
GENERATION (GWH)
16.75
101.19
89.19
93.44
6
% OF PROGRAM (4/3)
AN OVERVIEW
APRIL 2018 - DEC-2018
PLANT LOAD FACTOR (%)
Monitored Target Capacity Apr 2018 to (MW) Mar 2019
THERMAL
Category
SUMMARY- ALL INDIA
ACTUAL*
10
ACTUAL SAME PERIOD 2017-18
31803.77 4778.33
113441.39 1050291.7 1008502.3
4375.21
118799.98
31469.47
895647.08 858478.85
9
PERIOD : JANUARY-2018
99.26
94.15
103.34
101.48
98.69
11
104.14
91.56
104.72
98.95
104.33
12
% OF LAST % OF PROGRAM YEAR (9/10) (9/8)
APRIL 2018 -JAN-2018
ENERGY GENERATION REPORT
MONTHLY SUMMARY OF DOMESTIC COAL Comparative Price of Domestic Coal: Power/Non-power. *The price shown in the Chart below is without: (a) Surface Transportation Charges. (b) State specific taxes. (c) Coal company or area wise charges if any. (d) Evacuation Facility Charges INR 50 per tonne w.e.f. 00:00 of 20.12.2017 GCV (Kcal/kg) (Mid-value)
G3-6400-6700
G5-5800-6100
G7-5200-5500
G10-4300-4600
G11-4000-4300
G12-3700-4000
Basic ROM price (Rs./te)
3144/ 3144
2737/2737
1926/2311
1024/1228
955/1145
886/1063
Tentative Ex-Mine Price*
4447/4447
3941/3941
2932/3411
1809/2063
1724/1959
1638/1858
COAL India’s 2018 thermal coal imports rose at the fastest pace in four years, according to two industry sources, despite moves by Prime Minister Narendra Modi’s government to cut imports in a bid to reduce its trade deficit. Coal is among the top five commodities imported by India, one of the world’s largest consumers of coal, and the rise in imports of the fuel after two consecutive years of decline adds to its trade deficit. Coal India Ltd has supplied 389.63 million tonnes coal to power sector during current year, registering a growth of 8% over the same period last year. Railway rake loading of CIL has increased by 8% during current year as compared to the same period last year, an official statement said. “The coal ministry has been in constant endeavor to maintain coal stock at sufficient level and increase coal supply to meet energy need of the country,” it said. The current focus of the government is on boosting production from operational coal mines, according to Minister for Coal, Piyush Goyal. Responding to a query on the status of commercial coal mining, Goyal said, “We are focusing more on the end–use mines first because that is where immediately we have to get the excitement and get the people to get the coal mines. We are certainly considering some more relaxations.” Goyal said there has been an increase in coal consumption and transport. “The Railways has loaded 40 million tonnes more coal this year compared with the same period last year,” he said.
RAIL A focus on increasing the rail capacity for freight and passengers, remodelling more trains for shortdistance passenger traffic, and more electrification are some of the strategies that the Indian Railways is adopting, said Girish Kumar Pillai, Member-Traffic, Railway Board.
POWER High spot energy prices are unlikely to sustain in the medium terms as unutilised thermal power capacity and a spike in generation from renewable sources will weigh on. A report on the outlook for the power sector by Icra says that high energy demand coupled with domestic coal shortages fuelled a surge in spot power tariffs in recent months.
28 | CCAI Monthly Newsletter January 2019
India’s power sector is undergoing a noteworthy change, and this has redefined the industry outlook. Demand for electricity is seeing a steady growth with a pick-up in the economy, especially manufacturing activity, as well as favorable government policy. The government has implemented various progressive measures to maximise power generation capacity and improve distribution. India has made great steps in raising access to electricity; as more than 13 crore people joined the power grid since 2013. Also, a close look at the index of electricity showed it has been growing considerably in core sector data. Per capita electricity consumption, which was a mere 16.3 units in 1947, has increased to 1,122 units in 2016-17. 2018 marked the turnaround of the thermal power sector. A steady rise in demand began pushing up utilization levels, and as fuel supplies lagged demand, prices in the spot electricity market shot up. But insufficient coal and high maintenance shutdowns weighed on earnings, leading to subdued performance of shares of power companies. Even so, an earnings rebound is now increasingly looking likely. First, demand has continued to perk-up. Thermal power generation between April and November is up 5%, slightly higher than the growth in the year ago period. Fuel supplies are improving, even though only incrementally.
CEMENT Cement Manufacturers’ Association (CMA) and Federation of major Central Trade Unions have signed a Memorandum of Understanding agreeing on an increase in gross pay, enhanced dearness allowance and service weightage. The present MOU is for a duration of four years from April 1, 2018 to March 1, 2022. It provides for an increase of Rs 5,000 per month in the Gross Pay of cement employees (to be paid in two instalments of Rs 2,500 each with effect from April 1, 2018 & April 1, 2020). The MOU also provides for enhanced Dearness Allowance, Service Weightage benefits and other benefits. Arrears for 10 months will be paid in two instalments. The domestic cement demand is expected to be at 7 percent in FY2019 and around 8 per cent in FY2020, driven by housing, primarily rural housing and affordable housing and improved focus on infrastructure segments like roads, metro and irrigation projects, rating agency Icra said. The agency estimates around 15-18 MTPA to get added in FY2019-FY2020
SteeL The Steel Ministry will soon set up a Safety Directorate that will oversee the safety standards in the steel industry. Speaking after the Parliamentary Consultative Committee meeting in Goa, Steel Minister Birender Singh said the safety directorate would be operational soon, an official statement said. Singh also said that a National Scrap Policy is also being drafted, which will be ready in a few months. This will make available nearly 7 million tonne scrap in the country. At present, the requirement of scrap is around 8.3 million tonnes and most of it is met with scrap imports. India’s steel ministry is putting pressure on automakers to use locally made steel by refusing to back down on tougher import rules despite warnings that the new regulations could disrupt the production of cars, government and industry sources said. The steel ministry in August announced stringent import rules for some high-grade steel products that are sourced by carmakers from countries such as Japan and South Korea but not yet manufactured in India. Any further decline in the prices of steel products does not seem feasible, according to Steel Authority of India (SAIL). “Taking a cue from the international market, the domestic steel prices, particularly for flat products, were under pressure for some time. The recent trend, both in the Chinese and other global market, is showing stability in prices. There is also an increasing trend in raw material prices, both for coal and iron ore,” SAIL said. CCAI Monthly Newsletter January 2019
| 29
OVERALL DOMESTIC COAL SCENARIO Coal Production (in MT) Company
December, 2018
December, 2017
% Growth
April- December, 2018
April- December, 2017
% Growth
CIL
54.1
54.6
-0.9%
412.5
383.9
7.4%
SCCL
6.0
5.7
6.4%
45.6
42.0
8.5%
Overall Offtake (in MT) Company
December, 2018
December, 2017
% Growth
April - December, 2018
April - December, 2017
% Growth
CIL
52.8
53.4
-1.2%
444.6
421.4
5.5%
SCCL
6.1
6.0
2.1%
49.1
46.7
5.2%
Coal Despatch to Power (Coal and Coal Products) (in MT) Company
December, 2018
December, 2017
% Growth
April – December, 2018
April – December, 2017
% Growth
CIL
42.4
41.6
1.9%
360.0
333.4
8.0%
SCCL
5.0
4.9
1.8%
40.0
38.7
3.3%
Spot e-auction of Coal (in Mt) Company
Coal Qty. Allocated December, 2018
Coal Qty. Allocated December, 2017
Increase over notified price
Coal Qty. Allocated April - December, 2018
Coal Qty. Allocated April- December, 2017
Increase over notified price
CIL
1.00
5.24
111%
18.84
31.71
89%
Special forward e-auction for Power (in Mt) Company CIL
Coal Qty. Allocated December, 2018
Coal Qty. Allocated December, 2017
Increase over notified price
Coal Qty. Allocated April - December, 2018
Coal Qty. Allocated April - December, 2017
Increase over notified price
-
-
-
21.91
27.43
79%
Exclusive E-auction for Non- Power (in MT) Company
Coal Qty. Allocated December, 2018
Coal Qty. Allocated December, 2017
Increase over notified price
Coal Qty. Allocated April - December, 2018
Coal Qty. Allocated April - December, 2017
Increase over notified price
CIL
0.62
-
37%
7.93
10.78
63%
Company
Coal Qty. Allocated December, 2018
Coal Qty. Allocated December, 2017
Increase over notified price
Coal Qty. Allocated April - December, 2018
Coal Qty. Allocated April - December, 2017
Increase over notified price
CIL
1.50
-
101%
2.00
0.35
89%
Special Spot e-auction (in Mt)
30 | CCAI Monthly Newsletter January 2019
MONTHLY SUMMARY OF IMPORTED COAL & PETCOKE Coal Price Index COAL
(kcal/kg)
Monthly Price - FOB
Monthly Price - FOB
Monthly Change (USD)
South Africa South Africa Australia Indonesia Indonesia USA
6000 NAR 5500 NAR 5500 NAR 5000 GAR 4200 GAR 6900 NAR
USD 92.44 USD 64.72 USD 63.50 USD 49.97 USD 32.83 USD 65.84
INR 6562 INR 4594 INR 4507 INR 3547 INR 2331 INR 4674
-2.29 -2.89 1.97 3.61 2.71 -6.16
PET COKE
Sulphur
India-RIL(Ex-Ref.) Saudi Arabia (CIF) USA (CIF)
-5% + 8.5% - 6.5%
Price INR 8850 INR 6403 ($90) INR 6786 ($96)
Exchange Rate
Change (Monthly)
USD/INR 70.988
0.26
Coking Coal Price: Semi Soft
Low Vol PCI
Mid Tier PCI
FOB Aus
Premium Low Vol CFR China
FOB Aus
HCC 64 MID Vol CFR China
FOB Aus
FOB Aus
FOB Aus
CFR India
FOB N China
200.58
200.90
178.95
189.18
118.77
125.92
123.92
335.70
327.30
South Africa: • Coal exports out of South Africa’s main coal export port Richards Bay Coal Terminal declined 4% to 73.5 Mt and it was not due to operational issues but was the result of weaker global demand according to RBCT CEO Alan Waller. This decline occurred despite the main off-taker of South African coal, India (which received 48% of RBCT exports), having an unusually strong year for coal imports in 2018. • SA, with the sixth largest coal resource in the world, should position itself to supply pent up demand for the fossil fuel in developing countries. Speaking at the IHS Markit Annual South African Coal Export Conference in Cape Town, industry leaders said that despite growing negative sentiment towards coal in the Western world, this was not the case in developing and emerging nations.
Australia: • Chinese restrictions on imports of Australian coking coal have now been extended to thermal coal as well, stoking fears the curbs may spread to more discharge ports across the country, sources said.
Met COke 62% CSR
• Australia’s key thermal coal export terminals under the Port Waratah Coal Services banner at the Port of Newcastle saw year on year growth in volumes in 2018, falling short of the all-time record, and further gains are expected this year, PWCS said. • Black coal mining has been predicted by IBISWorld to be one of the Australian industries that will experience a decline in revenues this year as market conditions turn. IBIS World expects revenues in the black mining industry to fall by 14.2 per cent in 2018-19 due to a decline in prices for both coking and thermal coal.
Indonesia: • Indonesia to further relax export procedures. The government said it would ease procedures to boost exports, with the aim of bolstering the country’s current account, as the trade deficit was recorded at US$ 8.57 billion in 2018, the largest deficit since 1975. Statistics Indonesia (BPS) recorded that the country had a $11.4 billion trade surplus in 2017. • The government revised down the Indonesian coal reference price to US$92.41 per ton in January, 0.1 percent lower than the price in the previous month, which was $92.51 per ton. Energy and Mineral Resources Ministry spokesperson Agung Pribadi CCAI Monthly Newsletter January 2019
| 31
said the revision was in response to China’s new coal import quota policy. “The policy has led to lower coal consumption in China,” he told. The government targets annual coal production of 485 million tons this year, 25 percent of which is for the domestic market obligation (DMO), equal to 121.25 million tons, which will mostly be used to fuel power plants.
USA: • Contrary to popular belief, the United States is using less coal than ever before – and in 2018, coal usage reached its lowest level in almost 40 years. After reaching its peak in 2007, coal usage has been in sharp decline as safer and more efficient energy sources take on more substantial roles on the American electrical grid. According to a recent report from the U.S. Energy Information Administration, coal usage fell by 4% in 2018, which is the lowest it has been since Jimmy Carter’s presidency in 1979. • Total US thermal and metallurgical coal exports and production are projected to remain relatively flat in 2019 compared with 2018 levels, according to a report by Seaport Global analysts released. Seaport Global’s Mark Levin, senior analyst, and Nathan Martin, senior associate analyst, project US coal production to total 760 million tons in 2019 compared with an estimated production of 758 million tons in 2018.
Pet Coke: • No relaxation of order limiting import of pet coke. The Supreme Court rejected a batch of applications from different industries seeking relaxation of its earlier order limiting the import of pet coke for the
32 | CCAI Monthly Newsletter January 2019
use of certain industries, including cement and aluminium, as feed stock. “We will die one day but these industries will prosper,” said a bench of Justice Arun Mishra and Justice Deepak Gupta refusing to dilute their last year’s order limiting the import of pet coke to 1.4 million metric tonnes. • Petroleum Coke market expressed US$ 16,713.9 Mn in 2016 with the CAGR of 8.10%, thus growth period of this market can be stated as from 2018-2027. According to a latest study report published by the MarketResearch.Biz, the global markets booming and expected to gain eminence over the forecast period. The market is forecasted to demonstrate a spectacular growth by 2027, surpassing its previous growth records in terms of value with a prominent CAGR during the anticipated period (2018 – 2027).
Shipping: • Indonesian insurance rules that come into effect on Feb. 1 are causing huge coal supply backlogs, with dozens of ships held up outside ports unable to load as authorities start checking to see if vessels are in compliance with the new policy. A regulation issued in August last year requires Indonesian exporters of coal and palm oil to use local insurers from Feb. 1, and also requires them to use local shipping companies from May 2020. • Combined coal inventories at key northwest European import terminals have risen to a one-month high of 7.1m tonnes as port operations slowed over the holiday season but vessel arrivals remain strong. Stocks at the four Amsterdam, Rotterdam and Antwerp (ARA) dry bulk terminals were more than 70% higher on the year and only marginally below early December’s multi-year high of 7.2m tonnes.
PRODUCTION AND OFFTAKE PERFORMANCE OF CIL AND SUBSIDIARY COMPANIES COAL PRODUCTION (Figs in Mill Te) JAN’ 18
SUB CO. ACtUAL thIS YEAR ECL
5.16
BCCL CCL
APR’18 - JAN’18
ACtUAL SAMe % PeRIOD LASt GROWTH YEAR
ACTUAL thIS YeAR
ACtUAL SAMe PeRIOD LASt YEAR
% GROWTH 16.5
4.62
11.9
38.09
32.7
2.97
3.5
-15.2
24.45
25.47
-4
6.86
5.63
21.8
48.51
42.92
13
NCL
9.22
8.72
5.7
83.87
76.17
10.1
WCL
6.08
5.18
17.4
38.24
32.93
16.1
SECL
13.58
14.2
-4.4
124.33
115.9
7.3
MCL
13.23
14.69
-9.9
111.61
113.99
-2.1
NEC
0.1
0.15
-31.2
0.55
0.5
9.5
CIL
57.2
56.68
0.9
469.65
440.6
6.6
OFFTAKE (Figs in Mill Te) JAN’18
SUB CO. ACtUAL thIS YEAR
APR’18 - JAN’18
ACtUAL SAMe % PeRIOD LASt GROWTH YEAR
ACTUAL thIS YeAR
ACtUAL SAMe PeRIOD LASt YEAR
% GROWTH
ECL
5.06
4.4
15.1
39.78
34.06
16.8
BCCL
2.76
3.19
-13.5
27.33
26.93
1.5
CCL
6.19
5.7
8.7
55.16
55.04
0.2
NCL
8.86
8.67
2.2
84.7
79.64
6.4
WCL
5.12
4.63
10.6
44.88
39.82
12.7
SECL
12.77
14.09
-9.4
128.2
125.02
2.5
MCL
11.58
12.88
-10.1
116.44
113.99
2.2
NEC
0.1
0.11
-12.6
0.54
0.61
-10.9
CIL
52.44
53.67
-2.3
497.04
475.09
4.6
CCAI Monthly Newsletter January 2019
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Note
34 | CCAI Monthly Newsletter January 2019
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