CCAI Newsletter October-19

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Vol. XLVIII No. 07 Published on : 28.10.2019

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From the Editor’s Desk

The target of world’s biggest coal producer- Coal India to produce 660 million tonnes in the current fiscal wit nessed a significant slump as torrential rain lashed the country’s eastern states during monsoon this year, floo ding a number of key mines in the region. Monsoon shower in India were 10% abo ve average in 2019 the highest in 25 years and continued longer than expecte d.

CIL’s production output registe red an overall 5% dip in the first half of FY201920 as compared to the same period last year while it sunk by 23.5% in September alone, leading to limited sup ply and spurring the possibi lity of higher imports.

According to a study by ICR A, country’s overall thermal coal import is likely to cross the 200-million tonnes (MT) mark in the current fina ncial year.

The central miner has, howeve r, planned a slew of measures to make up for the current shortfall in coal offtake including enhanced coal evacua tion through new railway links, increased pro duction hours, mechanised coal transportation etc.

Senior CIL officials claimed tha t the company has the resilien ce to bounce back by ramping up its production tem po in the remaining par t of the year.

The coal behemoth has decided to invest an estimated Rs. 17,500 crore over the next five years to put in place completely mechanised transportation of coal through piped conveyor belt s in its large mines from the pitheads to despatch points by 2023-24 which will promote environment safety and prevent possible coal pilferage.

The ministries of Power, Coa l and Railways have also form ed a web por tal named PRAKASH (Power Rail Koyla Availability through Supply Har mony) to track the movement of coal from the min es to power plants.

Meanwhile, the possibility of commercial mining to be intr oduced by December end in the country may hav e led to subdued response in the ongoing rounds of coal block auction as the bid ders tend to wait and watch.

The government data shows that only 12 of the 42 blocks that were put up for auc tions in the 8th, 9th and 10th round of bids, receive d adequate number of bidder s.

In the power sector, countr y’s push towards the renewa ble energy sources has become more necessary as a number of Indian cities includi ng the national capital chock due to severe air pollutio n in recent months. Ministry of New and Renewable Energy (MNRE) has stated that the nation will exceed its goal of 175 GW in renewable by 2022.

On the global front, the late st report by International Ene rgy Agency (IEA) on world energy scenario clearly suggests that in order to me et the global climate goals, China and India have to drastically bring down the ir coal usage.

While in USA, coal is respons ible for 25% of the total elec tricity production, India and China currently account for 60. 2 per cent of global elec tricity generated by the fossil fuel.

The two Asian giants are, however, making conscious efforts to achieve the sustainable energy goals. China has already set its target to have 8.7 GW of coalfired capacity shut by the end of 2019 as the country con tinues its coal-tonatural gas switch to fight air pollution while in India renewa ble energy has now become cost-competitive wit h coal-fired generation.

4 | CCAI Monthly Newsletter October 2019

Content Vol. XLVIII No. 07 October, 2019

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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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.

20 Global 24 |In Parliament 32 |Monthly Summary Of Domestic Coal Monthly Summary Of Imported Coal & 33 |

Petcoke

36 |Energy Generation Report 37 |Overall Domestic Coal Scenario And Offtake Performance 38 |Production Of Cil And Subsidiary Companies CCAI Monthly Newsletter October 2019

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CONSUMERS’ PAGE Present Coal Scenario Coal India has produced 39.35 mt of coal in October 2019, dropped by 20.9% compared to the same month (49.78 mt) last year. For the period April-October 2019, coal production declined 8.5% to 280.36 mt compared to corresponding period of previous year (306.24 mt).

Coal offtake was down by 18.9% to 40.50 mt in October this year as compared to last year (49.96 mt). For the period April-October 2019, coal offtake declined by 7.2% to 316.26 mt compared to same period last year (340.76 mt).

Consumers’ Concern 1. Coal Stock Position Both thermal power plants and industries are not having enough coal stock at present due to significant slump in coal production by CIL. Production was hampered by heavy rain mostly in eastern states of the country, leading to limited supply to the consumers and spurring the possibility of higher imports. As informed by IRCA, overall coal imports may cross 200 mt in 2019-20. However, CIL has planned a slew of measures to make up for the current shortfall in coal offtake including enhanced coal evacuation through new railway lines, increased production hours, mechanised coal transportation etc.

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2. Coal Quality issues Grade slippages have been observed from the sidings/collieries stated below:

Coal Company Collieries/Sidings (Declared Grades)

ECL

DBCP-Siding (G-4) of Pandaveswar Area, Parbelia (G-4), Mouthdih G-4), Patmohona (G-4), Chinakuri (G-4), Dubeswary (G-4), Narsamuda (G-4) and Bejdih (G-6) of Sodepur Area, Chitra (G-6/G-8) of SP Mines Area, SBP 1 (G-5) of Sonepur Bazari Area, Bankola -1 (G-4), Khandra (G-4), Kumardihi-A(G-4), Tilaboni (G-4) & Shyamsundarpur (G-4) of Bankola Area, Jhanjra (G-5) of Jhanjra Area, Madhabpur (G-4), Madhabpur-Patch (G-5) & Jambad OCP (G-5) of Kajora Area and Gourangdi (G-8), Bonjemahari (G-5), Dabor (G-7) & Mohanpur (G-7) and Gourangdi Begunia (G-7) collieries of Salanpur Area and Sankurpur (G-6) of Kendra Area.

BCCL

Dahibari (G-6) & Dohibari OCP (G-8) of Chanch Victoria Area and Muraidih (G9) & Phularitand (WIV) collieries of Barora Area, ENA OCP (W-III) of Kusunda Area, Rajapur OCP (W-III) of Bastacola Area.

SECL

Kusmunda OC (G- 11), Gevra OC (G- 11), Baroud OC (G-09), Jampali Mines (G-12 & G-15) and Govinda (G-11) & Katora Mines (G-8) and Chirimiri Sidings

CCL

Magadh Mines (G-12) and Amrapali Mines (G-11), Gridih (G-8/G-10), Central Pit Area.

WCL

Tawa- 1 & Tawa- 2 Mines (G6) and Chhattarpur- 1 Mines (G-9) of Pathakhera Area and Neharia Mines (G-7) of Pench Area.

Consumers have requested the Coal Ministry, Coal Secretary, Coal Controller, CIL & its Subsidiaries for taking necessary action so that they may receive declared grades of coal from the above mentioned sources.

notes by the Subsidiaries as well.

3. Non-receipt of Referee Analysis Report, reconciliation and credit notes from different CIL Subsidiaries and request for formulation of a suitable policy for all Subsidiaries.

4. Request for extension of validity period of Road Delivery Orders by CCL and BCCL.

Consumers procuring coal from different CIL Subsidiaries have not received Referee Analysis Reports since long. Though they have already deposited the required amount to the Referee Laboratory for analysing the samples they have challenged but due to non-receipt of analysed reports entire reconciliation procedure is held up at different Subsidiary Coal Companies. There has been enormous delay in issuance of credit

CIL has been requested for formulation of a suitable policy so that such situation does not arise in future.

Due to heavy rain during the month of July, August and September 2019, coal dispatches by road mode were seriously impacted and large quantities of coal booked by the consumers from CCL and BCCL under auctions have remained unlifted within the time limit.

Therefore, consumers have requested to extend the validity period of such booked quantity for a period up to 31st October 2019 instead of 30th September 2019.

CCAI Monthly Newsletter October 2019

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5. Shortage of coal quantity in rakes.

Consumers both in the power and non-power sectors have witnessed shortage of 2 to 6% coal quantity in the rakes received by them from almost all the CIL Subsidiaries. In a few rakes, shortages have gone up to even higher. Authorities should intervene into the matter in order to resolve it.

6. Issues of Railways faced by the consumers.  Sick wagons: Due to supply of sick wagons the overall loadability of coal rake reduces.

Coal companies does not take this in account while allocation. Thus the coal materialization reduces.  Overloading Penalty: Coal quality and its density differs from the same siding. Thus during loading, coal companies are unable to judge the weighment of coal in specific wagon. Hence, in some wagons under loading and in some wagons overloading happen.

Consumer does not have any role in weighment procedure. Overloading penalty should be removed as the same is recovered in RR from the consumers.  Mix wagons: Now a days the rake comprises of Mix wagons i.e. N,NHL,NR. Thus in single rake the loadability of individual wagon differs. Hence, there is confusion during loading which leads to under loading/overloading of wagons.  Mistake in RR preparation: Many times there are inadvertent errors occur in RR preparation. If there is any under charge the same is recovered in Next RR, but if there is any over charge the consumer has to go through the lengthy procedure of asking Refund from the CCM office. Getting refund is time consuming & cumbersome process. Therefore overcharging should also be rectified in Next RR.  Mis-match in Weighment sheet & RR: Multiple times it is observed that there is mis-match between the wagon details of Weighment sheet and RR. These result in overloading penalty to the customers in some wagons

08 | CCAI Monthly Newsletter October 2019

though in actual there is no overloading. This should be taken care of

7. Cancellation of rakes due to nonavailability of coal from SECL & WCL and charging of wagon registration fees by Railways.

Number of rakes to the industries (including CPPs) have been cancelled from different Sidings of SECL and WCL as the loading did not commence within stipulated time due to nonavailability of coal. Railways are also charging wagon registration fees from the consumers for cancellation of these rakes.

Consumers have requested for formulating a suitable policy so that the cancelled rakes are revalidated and seniority of such long awaited rakes do not get lapsed. Wagon registration fees should not be charged by the Railways as well for no fault at the consumers’ end.

8. Non-availability of coal at Baroud colliery and slow movement of rakes from Manikpur sidings of SECL. Though consumers have already made payment for their allotted quantity for the month of June, July, August and September 2019, they have neither received any Road Delivery Orders nor the lifting process has started from Baroud colliery of SECL. Some of the consumers are not getting sufficient quantity also from Manikpur Siding.

Therefore, consumers have requested to resolve the problem at the earliest as their production process is highly dependent on the supply of that coal.

9. Refund of CST. In spite of depositing ‘C’ form in time and regular follow ups with the higher authorities, some of the consumers in the non-power sector have not received refund of CST amount from SECL so far. Therefore, SECL should return the amount at the earliest.

POWER Web portal to better track coal movement launched The ministries of Power, Coal and Railways have formed a web portal to track the movement of coal from the coal mines to power plants. The portal is named PRAKASH — an abbreviation for Power Rail Koyla Availability through Supply Harmony.

Speaking at the launch event, Minister for Coal, Mines and Parliamentary Affairs, Pralhad Joshi, said: “This portal will help avoid any blame game between ministries on the supply and availability of coal. It will also help coal better plan better coal supplies.”

Minister for Power and Renewable Energy (Independent Charge), RK, Singh said: “The ownership of this portal has to be shared and the ministries must assign officials to regularly update the data.”

This portal is designed to help in mapping and

10 | CCAI Monthly Newsletter October 2019

monitoring entire the coal supply chain for power plants, through coal stock at the supply end (mines), coal quantities/rakes planned, coal quantity in transit and coal availability at power generating station.

Power Ministry asks state to expedite reforms, advises to stick to PPAs With the country achieving electrification for all households, the Union ministry of power is gearing up for another set of reforms – to improve the availability and quality of power.

The two-day state power ministers’ conference this week will see the Centre telling states to expedite supply reforms, renewable capacity addition and improve energy efficiency standards. As the Centre passes the baton to the states to take forward the reforms, payment

delay by power distribution companies (discoms), resulting in over dues to power generators, is a major cause of worry.

At the same time, several states are reviewing or cancelling power purchase agreements (PPAs) with renewable power projects.

Schemes to promote clean energy will be the prime focus of the conference this time. KUSUM aims at providing solar-run irrigation pumps to farmers. This scheme has three components — 10,000 Mw of solar-run pumps on arid lands to be set up by farmers who will sell power to the state, 1.75 million solar pumps for irrigation and solarisation of 10 lakh existing grid-connected pumps.

Another scheme, which would need support of states, is the Centre’s increased focus on rooftop solar projects. Tenders for these projects to be installed on commercial locations would be issued by state-owned discoms soon. An integrated portal for application and processing of implementation would also have to be set up by the states.

The Centre also further plans to ask states to ensure curtailment of renewable power is resorted to only for grid security reasons and through a transparent process.

India looks to provide overhead power connection to Sri Lanka The Union government is exploring the option of an overhead electricity link with Sri Lanka as part of India’s strategy to create a new-energy ecosystem for the neighbourhood against the backdrop of China’s ambitious Belt and Road Initiative.

The overhead line is being considered after the earlier proposal to set up an undersea power transmission link to supply power to the island nation turned out to be prohibitively expensive.

The earlier plan involved state-run Power Grid Corp. of India Ltd setting up a link for 1,000MW

between India and Sri Lanka, of which 30km would be under the sea. The transmission link was to run from Madurai in Tamil Nadu to Anuradhapura in Sri Lanka’s north-central province.

Cross-border energy trade is a key part of Prime Minister Narendra Modi’s South Asia-focused neighbourhood-first policy. The electricity link is part of India’s strategy to negate the growing influence of strategic rival China in the Indian Ocean region and South Asia.

India has been supplying power to Bangladesh and Nepal, and has also been championing a global electricity grid that may initially aim to link countries, such as Myanmar, Thailand, Cambodia, Laos and Vietnam, with the sub-continent.

Power sector to save Rs 2,500 Cr annually due to corporate tax cut: ICRA The corporate tax cut is a positive development for power sector as it will result in an estimated annual savings of Rs 2,500 crore for the power distribution segment, rating agency ICRA said on Monday.

The government on September 20 slashed the income tax rate for companies by almost 10 percentage points to 25.17 per cent and offered a lower rate to 17.01 per cent for new manufacturing firms to boost economic growth rate from a six-year low by incentivising investments to help create jobs.

"The recent announcement by the Government...is a positive development for the power sector, as it would allow power generators with cost plus power purchase agreements (PPAs) to pass on the lower tax benefit to power distribution utilities (discoms)," ICRA said in a statement.

As per ICRA's estimates, the extent of benefit that would accrue to discoms from power generation and transmission segments (mainly from central and state utilities) would be about CCAI Monthly Newsletter October 2019

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Rs 25 billion (Rs 2500 crore) annually.

grow at 8.2%

With time, effort and luck, Ladakh could become north India’s power hub

Demand for electric power transmission and distribution equipment in India is forecast to rise 8.2% per year to $15.8 billion in 2023, the Freedonia Group, a division of MarketResearch. com, has predicted in a recent report on the transmission and distribution sector.

The government says converting Jammu and Kashmir into a Union territory (UT) will encourage a business investment boom, accelerating economic growth and employment. That’s a bit of a fantasy right now. Yet, one massive project worth Rs 45,000 crore is indeed coming up, with little fanfare. This is neither in Jammu nor in the Kashmir Valley, but in Ladakh.

Promoted by the Solar Energy Corporation of India, it aims to instal 7,500 MW of solar energy by 2023. Not many readers may know that of all the places in India, the cold desert of Ladakh receives the highest solar energy, thanks to cloudless days and a clear mountain sky.

Some experts think a solar cell may yield almost 10% more electricity in Ladakh than in western Rajasthan, the second-best solar site.

Union power minister R K Singh says that the solar potential of Ladakh is as high as 23,000 MW. So, if the first projects totalling 7,500 MW succeed, capacity can later be tripled.

Singh has been pushing this project for some time. It has two modules. One is of 2,500 MW in Suru, Zanskar, and will have transmission lines taking electricity into the Kashmir Valley.

The second module of 5,000 MW (plus future modules) will use a transmission line going south to feed Haryana and Delhi. This module was originally to come up at Hanle-Khaldo. But that turned out to be a significant wildlife site.

So, the site is being shifted to the Morey plains, 180 km south of Leh.

Demand for power transmission and distribution equipment to 12 | CCAI Monthly Newsletter October 2019

Upgrades and expansion of the nation's underdeveloped electricity sector – both to reduce the large amount of power currently lost during transmission and to improve access to electricity in rural areas will provide strong opportunities for growth in the country, as consumers switch away from alternative sources of power such as generators.

"India has set goals toward diversifying its energy sources to include renewable options – including solar, wind, and hydropower – which will necessitate the installation of additional transmission capacity," the report mentioned.

Factors supporting increases include strong growth in China - by far the largest national market - which will account for 33% of new demand rapid industrialization in India, the third-largest market for these products in the world.

Budge Budge plant of CESC has the best load factor in India The 750-MW thermal power station of CESC Limited, located at Budge Budge, West Bengal, has been ranked amongst the best in the country in terms of Plant Load Factor (PLF).

According to CEA sources, the PLF of Budge Budge generating station (3x250 MW) was around 96.80 per cent in August 2019, for which the latest results have just been announced, CESC said in a release. The first unit of CESC’s Budge Budge (250 MW) was commissioned in 1997, followed by the second unit (250 MW) in 1999 and the third unit (250 MW) in 2009.

Haldia Energy, another generating plant, of CESC Ltd also features amongst the top six per-

forming thermal power plants for August. Haldia Energy had a PLF of 93.32 per cent.

Adani, Tata Power plants among those seeking coal linkages without curbs As many as 16 power plants, including those owned by Adani, Tata Power, Jindal Power and others, with a combined generation capacity of 14,700 MW, have sought coal linkages without any usage restriction.

The move would enable the commissioned projects to sell coal in the short term and day-ahead market to atleast meet a part of their debt service liability. Coal is used for power generation but its availability is inadequate and international price is high compared to the domestic price.

Inadequate quantity of domestic coal, rising imports and high price for imported coal necessitates government intervention while allocating coal among power producing firms.

The projects include Adani’s Raikheda TPP with a capacity of 1370 MW, which completely requires coal linkages. Similarly, Jindal Power with a capacity of 1000 MW also requires the entire capacity to have coal linkages.

Prayagraj Power Generation Company Ltd (PPGCL), with a capacity of 1980 MW, has coal linkages of 1740 MW and requires 240 MW (for new projects). Prayagraj Power is owned by Tata Power.

Renewable energy capacity by 2022 to exceed 175 GW target: MNRE The New and Renewable Energy Ministry denounced a Crisil report that stated the ministry may miss the renewable energy target by 42 per cent, and asserted that the clean power capacity by 2022 will exceed the goal of 175 GW.

The ministry termed the report as "ill founded", factually incorrect and lacking credibility, and pointed out that Crisil even did not consult it for its views on the target.

The report by Crisil highlighted that the country is likely to miss the renewable energy target of 175 GW by 2022 by a wide margin of 42 per cent due to many a regulatory challenge, policy flip-flops and also a steep fall in tariffs.

By the end of September 2019, the ministry said India has installed more than 82,580 MW of renewable energy capacity with around 31,150 MW of capacity under various stages of installation. Thus, by the first quarter of 2021, India would have installed more than 1,13,000 MW of renewable power capacity.

Besides this, around 39,000 MW of renewable power capacity is at various stages of bidding which would be installed by September 2021, taking the percentage of installed capacity to over 87 per cent of the targeted capacity, it said.

With only 23,000 MW of renewable power capacity left to bid, India is confident that the target of installing 1, 75,000 MW of renewable power capacity will not only be met but exceeded," it said.

Renewable capacity additions exceed new coal in India Coal power station capacity addition is seeing a declining trend in India. Between financial years 2012 and 2016, 10-20 gigawatt (GW) new coalpower station capacity was added every year to the grid. But, in the last three years, this dropped to 5 GW and is further declining.

According to the recent National Electricity plan by the Central Electricity Authority, India needs no extra coal power stations until at least 2027.

Gujarat recently announced it will not give permission to build new coal power plants. National Thermal Power Corp Ltd (NTPC), India’s largest power generating company, is also focusing CCAI Monthly Newsletter October 2019

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more on building new renewable capacity.

In June 2018, the NTPC decided to drop its 4,000 MW green field coal-fired Pudimadaka Ultra Mega Power Project (UMPP). A month later, the Maharatna utility confirmed it had no intention to pursue two other planned coal power plant developments — the 1,980 MW Nabinagar-2 and 1,600 MW Katwa thermal power generating units in Bihar and West Bengal.

In the last three years 70 per cent of the new generation capacities added to the grid are renewable.

International Solar Alliance corpus grows to $27 million The corpus size of the International Solar Alliance has increased to $27 million (roughly Rs. 175 crore), with the mobilisation of $8 million during 2018. This has been spelled out in a report on the work of the International Solar Alliance and an assessment of its programmes.

14 | CCAI Monthly Newsletter October 2019

An ISA official told Business Line that this collection will help in the setting up of the ISA Secretariat in India and will be the first UN-treaty based multi-lateral institution to be based out of the country.

The report said ISA and its International Corporate Committee, through advocacy and promotional endeavour, have so far raised a total corpus fund of $11 million through voluntary Corporate Membership Subscription. The Solar Energy Corporation of India (SECI), Indian Renewable Energy Development Agency (IREDA), Power Grid Corporation of India Limited (PGICL), Coal India Limited, Power Finance Corporation (PFC), Rural Electrification Corporation Limited (REC), NTPC Limited and ITPO have made a contribution of $1 million each for creating the corpus fund.

Softbank and CLP have contributed $2 million and $1 million respectively to the corpus which will help ISA to meet its expenditures once India stops financial support, the report said.

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DOMESTIC Thermal coal import likely to cross 200 million tonne in 201920: Icra The country’s overall thermal coal import is likely to cross the 200-million tonnes (MT) mark in the current financial year, according to Icra.

Coal India Ltd’s (CIL) production might fall short of its 2019-20 target of 660 million tonne (MT) by around 55-75 MT. CIL registered a year-on-year (y-o-y) decline of 23.5 per cent in production in September, as operations were impacted by labour issues and flooding of key mines due to heavy rains.

In the first half of the current financial year, CIL’s coal production witnessed a fall of 6 per cent y-o-y, in stark contrast to the healthy pro-

16 | CCAI Monthly Newsletter October 2019

duction growth of 7 per cent achieved in 201819.

“Thus, in order to achieve the targeted annual coal production or come anywhere close to the annual guidance of 660 MT and, given the first half slippages, CIL would have to step up to an average run rate of 2.3 MT coal production per day for the rest of the year,” it said.

This looks an unlikely task, given that in recent times, the central miner has been able to briefly sustain at the two million tonnes per day average coal production rate only in the months of March 2018 and March 2019, it said.

Coal-block auction elicits tepid response as bidders decide to wait and watch

Dismal market sentiment and expectations that commercial mining would soon be a reality have resulted in a tepid response for the blocks on offer during the current round of coal auctions.

These mines are being auctioned under the 8th, 9th and 10th round of bids simultaneously being conducted by the Coal Ministry.

way line in Chhattisgarh under136 kilometre long East Rail Corridor from Kharsia to Korichapar has become operational this month.

This will enable evacuation of coal from MandRaigarh and Korba coalfields of South Eastern Coalfields (SECL), the largest coal producing subsidiary of Coal India.

“In all, 45 bids were received for the blocks on offer. An adequate number of bids have been received for just six of the 27 blocks on offer in the auctions. Another six blocks received interest for allocation to State or Central government entities. In total, 12 of the 42 blocks envisaged to be auctioned or allocated in this round are now in the fray,” a top Coal Ministry official said.

East Rail Corridor is developed by Chattisgarh East Railway, a special purpose vehicle ( SPV) between SECL, government of Chattisgarh and IRCON International, with a war chest of Rs 3,055 crore. The railway line links Kharsia, Korichapar, Dharamjaygarh-Korba. SECL has started loading two rakes of coal per day from Bijari, Baroud and Jampalimines of Mand-Raigarph, which will increase further up to five-six rakes per day, pushing up coal supplies to power stations of Maharashtra and Gujarat.

Till now, coal mines were auctioned with a prespecified end-use for the coal to be mined. After inadequate response in subsequent bid rounds, the Centre decided to offer an added incentive and the winners have been allowed to sell up to 25 per cent of the total coal produced in the mine in the open market.

The Federation of Indian Mineral Industries (FIMI), which counts Rio Tinto's India unit and India's Adani Enterprises among members, objected to both plans in a August 23 letter to the Ministry of Coal and argued that the government should base prices only on Coal India's fuel supply agreements and e-auctions.

It also said that India should have a separate index for coking coal, used in steel mills.

Coal India banks on enhanced evacuation to make up for short supplies Even as production in CIL was hit due to heavy rains in Jharkhand, Odisha, Chattisgarh and Maharashtra, the mining behemoth hopes that new railway links, which will enable more evacuation of coal, will make up for the shortfall that is being estimated by the fiscal end.

An SECL spokesperson said a 44-km new rail-

CIL to invest estimated Rs 17,500 crore in mechanised coal transportation Coal India Ltd (CIL) has decided to invest an estimated Rs 17,500 crore over the next five years to put in place completely mechanised transportation of coal through piped conveyor belts in its large mines by 2023-24 from the pitheads to despatch points which will replace road transportation wholly.

This system is already operational in some of the mines but has not been adopted in a major way. This will be implemented in 35 of CIL’s projects, each having a production capacity of more than 4 million tonnes (mt).

Piped conveyor belt transportation of coal is a covered system for movement of coal and thus promotes environment safety and prevents possible coal pilferage.

This initiative involves setting up of Coal Handling Plants (CHPs) with silos having Rapid Loading Systems, which will have benefits like crushing, sizing of coal, quicker and quality coal loading. It will also have the advantage of preCCAI Monthly Newsletter October 2019

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weighed quantity of coal being loaded.

Currently, coal is transported via road by trucks from the pithead to the despatch point which tends to add to the dust and air pollution. Many residents have already raised issues of pollution and have held protests at some of the key mining areas of Coal India.

Indian miners reject govt plan to link coal index to foreign prices: Report India's miners are rejecting a government proposal to establish a national coal index that would be linked to international prices, documents reviewed by Reuters show, because it could make domestic supply uncompetitive.

The government is creating a coal price index as part of its plans to open the coal sector to outside investment and end state-run Coal India's control over prices. The country plans to invite bids from global firms for coal mining blocks by the end of 2019.

A government panel has proposed one index that would link directly to foreign indexes, such as in Indonesia and Australia and a second proposal that measures the value and volume of all coal transactions, including imports, and compares them to a base period.

Local coal prices would likely rise as a result of either proposed index, reducing the competitiveness of local supply, which typically has a lower heat content, to imports.

Singareni going full steam ahead in coal production The Singareni Collieries Company Limited (SCCL) is racing ahead in achieving the targeted coal production during this year in spite of incessant rains in the coal belt.

Against the target of 70 million (seven crore)

18 | CCAI Monthly Newsletter October 2019

metric tonnes for this financial year, the Stateowned coal major has achieved 3,05,20,025 metric tonnes, against a target of 3,14,63,100 metric tonnes, during the six-month period from April to September, an achievement of 97 per cent.

In the underground (UG) mines, production was 43, 94,863 metric tonnes against 51,64,100 metric tonnes target. Similarly, in the Opencast projects (OCP), it achieved 2,61,25,152 metric tonnes against the target of 2,62,99,000 metric tonnes.

RAILWAYS

Indian Railways faces cash crunch! Innovative steps being taken to fight revenue shortfall Indian Railways is facing a shortfall of around Rs 30,000 crore by year-end, due to a slowdown in earnings and mounting expenditure. To counter this, the Railway Board has suggested some short-term measures such as getting sponsors to clean railway stations and trains and discontinuing trains with below 50% occupancy.

The August-end figures indicate that the national transporter has already overshot its spending. The earnings have grown by nearly 3.4% while the expenses of Indian Railways have grown by nearly 9% this financial year.

Railway Board Chairman V K Yadav was quoted in the report saying that Indian Railways’ earnings and expenditure numbers till the month of July were fine. However, the earnings dropped in August as the coal loading took a hit because of the unprecedented floods.

Some of the other key measures proposed by the Railways are review trains with below 50% occupancy and decrease their frequency or merge them; eliminate diesel engines which are more than 30 years old to save fuel; get repair of staff quarters done by monetising In-

dian Railways’ land; save cost of fuel by implementing better practices; optimise maintenance practices as well as rework operations for better earnings.

All the zones of Indian Railways have been given a free hand to raise non-fare revenue. The immediate focus is to raise savings of around Rs 5,000 crore, as that is the sum that has been already spent off-budget.

STEEL

India imposes anti-dumping duty on certain steel imports India has imposed a provisional $29-$200 a tonne anti-dumping duty to rein in burgeoning and predatory imports of galvalume steel products from China, Vietnam and Korea which were causing material injury to the domestic industry.

The duty will remain in effect for six months.

tic producers like JSW Steel, Tata Steel and Bhushan Power and Steel among others.

Steel prices drop below dumping duty levels on muted demand Steel prices dropped below the anti-dumping duty of Rs 34,719 a tonne due to weak demand in the country. In fact, the domestic hot rolled coil (HRC) prices fell to 34-month low of Rs 34,250 a tonne in second week of October raising huge concern to the industry, which was expecting a demand revival in the festival season.

The anti-dumping duty is considered as the floor for domestic prices as steel imports cannot be done below that price level.

The domestic HRC prices have fallen 16 per cent in this fiscal following lacklustre demand from the key end-user industries.

As per the definitive anti-dumping duty imposed on certain flat steel products valid till August 2021, the threshold HRC prices stand at $489 tonnes (about Rs 34,719 a tonne).

JSW Steel Coated Products, a unit of Sajjan Jindal-led JSW Steel, had moved a petition before the Directorate General of Trade Remedies (DGTR) for imposition of the trade remedial measure on imports of the high-end aluminium and zinc coated flat products (galvalume) that find application in roofing purposes to making auto parts.

The difference between domestic and imported HRC prices has widened in recent months with the current local HRC prices were trading at a discount of 13 per cent to import prices.

Following investigations, the DGTR found that exporters from these three countries were sending galvalume to India “below their normal values”, causing “material injury” to the domes-

India’s steel demand growth dropped to 5 per cent in first half of this fiscal much lower than 7.5 per cent and 7.9 per cent logged in the same period of previous fiscals.

Steel demand growth in September quarter this year dipped to four per cent against 6.9 per cent logged in June quarter and 0.2 per cent lower compared to September quarter last year.

CCAI Monthly Newsletter October 2019

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GLOBAL Coal is still king’ in Southeast Asia even as countries work toward cleaner energy Coal is still a dominant fuel in the rapidly growing economies of Southeast Asia, even amid a general global move toward cleaner energy sources, data from several recent reports show.

“The narrative surrounding coal has been pessimistic across the world. This will result in the gradual slowdown of new coal-fired capacity in Southeast Asia,” said Jacqueline Tao, research associate at Wood Mackenzie, a commodity consultancy.

“However, the reality of rising power demand and affordability issues in the region mean

20 | CCAI Monthly Newsletter October 2019

that we will only start to see coal’s declining power post-2030,” The coal industry has been facing widespread criticism from environmental campaigners for causing pollution.

But global coal demand grew for a second straight year to reach 0.7% in 2018, data from the International Energy Agency (IEA) showed.

“Coal demand grows across much of Asia due to its affordability and availability,” Not only will coal continue to be the dominant fuel source in power generation in Southeast Asia, its use will grow and peak in 2027 before slowing.

China Looks to Shut Several Obsolete Coal Plants by End-2019 China targets to have 8.7 GW of coal-fired capacity shut by the end of 2019 as the country continues its coal-to-natural gas switch to fight air pollution.

According to China’s energy regulator, National Energy Administration (NEA), all regions and provinces in the country are told to have their coal-fired power units of less than 50,000 kilowatts (kW) shut down.

China will also close obsolete coal-fired power capacity that has reached the end of its design life, as well as larger coal plants of up to 100,000 kW in areas covered by large power grids, according to the regulator.

The total 8.7 GW of coal-fired capacity targeted for elimination accounts for just below 1 percent of China’s overall capacity.

China, however, has a whopping 226 GW of new coal plants in the pipeline and is the country with the largest coal capacity pipeline in the world, double the coal plant pipeline in India, Urgewald and 30 other NGOs said in a new update.

Chinese scientists turn black coal by-product into white paper More than 2,000 years after the invention of paper in China, the country’s scientists are claiming another first – a breakthrough that replaces its key ingredient with the dirty waste from coalfired power plants.

The result – which is almost indistinguishable from paper made from wood pulp – achieves a more than 90 per cent match to pure whiteness, despite being made with the black fly ash produced from burning coal.

mainly from Canada, Russia, the United States and other countries endowed with vast forests.

China has the world's largest paper industry, with paper and pulp production reaching nearly 100 million tonnes annually – more than all European countries combined.

China is also the world's largest electricity producer, collecting about 700 million tonnes of fly ash each year, according to government statistics. About 70 per cent of this waste – a byproduct of coal combustion composed of fine particles containing various minerals such as calcium and silicon – is used by the construction industry but the remainder has had nowhere to go, until now.

China to extend restrictions on Australian coal, say analysts China's restrictions on Australian coal are expected to remain in place into next year as Beijing seeks to moderate a spike in foreign imports of the commodity to protect domestic supply.

While there had been hopes in Canberra that the unofficial quota on Australian coal exports to China would be wound back shortly, analysts and traders in China said this week they expected the restrictions to remain in force for a while.

Coal analysts also said there was evidence of intensifying curbs on imported coal, with the major southern Chinese ports of Guangzhou and Fuzhou banning the commodity this week.

Both ports recorded a strong increase in imports this year.

China’s coal imports are expected to rise more than 10 per cent this year, higher than previous forecasts. Customs data showed China imported 251 million tonnes of coal for the first three quarters of the calendar year, up 9.5 per cent.

Because most forests in China are protected, the country’s paper mills source wood pulp CCAI Monthly Newsletter October 2019

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Australia lowers forecasts for thermal coal prices on weak demand

By 2030, coal would account for 59% of electricity volumes, with 8% from hydro, 6% from photovoltaic, 18% from wind and 1% from gas and diesel, the plan showed.

Australia’s Department of Industry has revised lower its forecasts for thermal coal prices as the market experiences weak demand for the fuel, it said in its Resources and Energy Quarterly.

U.S. Coal Giant That Pressed Trump for a Bailout Faces Default

In the latest report, the Canberra-based unit cut its forecast from the June edition for the average FOB Newcastle 6,000 kcal/ NAR thermal coal spot price for 2020 by 7% to $68/mt. The 2019 price was also dropped by 7%, to $77/mt, while the forecast for 2021 was lifted by 3% to $69/mt.

“In the first half of 2019, imports from Japan, South Korea and the EU were all lower on a yearon-year basis. While Chinese imports have been resilient, the prospect of tighter import controls have weighed on buying sentiment,” it said.

“Persistently low spot LNG prices have also encouraged some coal-to-gas switching – predominantly in Europe – further dampening import demand for thermal coal,” it added.

South African power generation plan keeps coal in the mix South Africa’s plans to boost electricity generation over the next decade will be a mix of renewable energy and coal power, Energy Minister Gwede Mantashe said.

The long-awaited Integrated Resource Plan published on Friday replaces a previous blueprint which had not been updated in almost a decade, holding back badly needed investment in new generating capacity.

South Africa’s power generation is currently dominated by coal, which accounts for more than 80% of output and makes the country one of the top-20 emitters of carbon dioxide worldwide.

22 | CCAI Monthly Newsletter October 2019

Murray Energy Corp., the U.S. coal giant that had pressed the Trump administration for help averting bankruptcy, may be headed toward default.

The largest closely held coal miner in America failed to make multiple payments to lenders this week, the company said in a statement.

Murray Energy is struggling to stay afloat, along with the rest of America’s coal miners, as cheap natural gas and renewable energy resources cut into coal’s share of the U.S. power market. At least four miners including Cloud Peak Energy Inc. and Blackjewel LLC have gone bankrupt this year, laying bare the decline of a fuel that once accounted for more than half of all U.S. power generation.

Murray’s potential default comes more than a year after the Trump administration’s efforts to subsidize struggling nuclear and coal-fired power plants — particularly ones that Murray supplies — failed, shot down by President Donald Trump’s own appointed energy regulators.

U.S. Renewables Could Top Coal by 2022 The United States is expected to add 22,000 megawatts of wind power capacity in the 18-month period ending December 2020. Based on the average output of new wind turbines, upgrades to existing wind farms, the steady rise of solar power, and the epic collapse of coal-fired power plants, the country could generate more electricity from renewable power sources than it does from coal as soon as 2022.

According to the U.S. Energy Information Administration (EIA), coal-fired power plants will account for just 25% of total American electricity production in 2019 and 22% in 2020. That's down from 28% in 2018 and nearly 50% in the early 2000s. The EIA also estimates that all renewable power sources -- primarily hydropower, wind, and solar -- will provide up to 19% of American electricity in 2020.

The United States counted 97,000 megawatts of installed wind power capacity at the end of June 2019 and is expected to have roughly 120,000 megawatts spinning by the end of 2020. However, an estimated 11,000 megawatts of the expected growth won't come on line until the final four months of 2020, which means it won't provide meaningful contributions until 2021

Russia to overtake Indonesia as top exporter of thermal coal by 2040: IEA

Russia is expected to overtake Indonesia as the biggest exporter of coal by 2040, as the Southeast Asian country's thermal coal production stagnates, the International Energy Agency said.

Indonesia is the world's largest thermal coal exporter and accounts for almost 90% of Southeast Asia's coal production, IEA said in its report.

The IEA stated that in its outlook scenario, Indonesia's exports are likely to decline from 350 million mt of coal equivalent presently to 210 million mt of coal equivalent in 2040.

Russia, the world's third largest coal exporter, aims to boost coal exports to Asia amid falling demand in Europe.

The country's thermal coal production is set to grow by more than 100 million mt to 550 million mt by 2035, as the country looks to invest in new coal infrastructure and focus increasingly on the growing Asia-Pacific region.

CCAI Monthly Newsletter October 2019

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IN PARLIAMENT GOVT. OF INDIA MINISTRY OF COAL LOK SABHA

Q. No. 3897. SINGARENI COAL FIELD

17.07.2019

ments in Telangana and its export to generate revenue and if so, the details thereof;

SHRI VENKATESH NETHA BORLAKUNTA:

(c) whether the Government has taken steps to protect the lives of coal employees in Singareni Coal fields while working in tunnels and if so, the details thereof; and

Will the Minister of COAL be pleased to state: (a) the steps being taken by the Government to extract coal in future from Singareni coal fields in Telangana State; (b) whether the Government has reviewed demand and supply of coal for various require-

24 | CCAI Monthly Newsletter October 2019

(d) the number of workers died and compensation paid to their families due to mishap in coal fields during the last three years and the current year?

ANSWER MINISTER OF PARLIAMENTARY COAL AND MINES

AFFAIRS,

(SHRI PRALHAD JOSHI) (a): In order to extract coal in future, Singareni

Coal companies Limited (SCCL) has planned to open 12 additional coal mines (11 opencast mines + 1 underground Mine) in the next five years in Telangana State. (b): SCCL demand and supply of coal to Telangana State for the FY 2019-20 (up to 10.7.2019) is given below: (Quantity in lakh tonne)

Sector

Annual Demand (FSA/MOU)

Progressive demand

Progressive Supply

Power

316.40

87.55

84.51

Non Power

94.00

23.5

17.63

Total

410.40

111.05

102.14

At present, there is no plan to export coal out of the country from Telangana.

III. Good ventilation is provided by efficiently operated auxiliary fans.

(c): SCCL is taking the following steps to protect the lives of the employees while working in tunnels:

IV. While the tunnels drivage is in progress suitable gradient is maintained for smooth operation of machines such as LHDs/SDLs etc.

I. Before starting the drivage of the tunnels, the rock types of the area/locality is thoroughly studied by the Exploration department and a report is prepared detailing the method to be followed for drivage of tunnels. A plan is also prepared for the same.

V. Controlled blasting techniques are adopted to minimize the effect on roof and sides.

II. Roof and sides are well supported with permanent structures like iron girders, concrete lining etc.

(d): Number of workers died and compensation paid in SCCL mines during the last three years is furnished below:

VI. Exclusive supervisory staff is engaged for tunneling works for ensuring the safety of the workers.

Sl. no.

Year

No of workers died in coal mines

Amount of compensation paid to their families (Rs. lakh)

1

2016

12

143.01

2

2017

12

124.82

3

2018

05

93.04

4

2019*

07

59.63

*UP TO JUNE 2019

CCAI Monthly Newsletter October 2019

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Q. No. 4056. COKING COAL RESERVES

17.07.2019

foreign countries and if so, the details thereof and the reasons therefor; e. the time by which they are proposed to be acquired along with the amount of funds earmarked for the said purpose; and

SHRI SUNIL DATTATRAY TATKARE: SHRIMATI SUPRIYA SULE: DR. HEENA GAVIT: DR. AMOL RAMSING KOLHE:

f. the steps being taken by the Government to improve the supply of coking coal in the country?

Will the Minister of COAL be pleased to state: a. the details of coking coal reserves in the country, State-wise;

ANSWER

b. the quantity of coking coal imported into the MINISTER OF PARLIAMENTARY AFFAIRS, COAL country during the last three years and the cur- AND MINES rent year; (SHRI PRALHAD JOSHI) c. the impact of the cost of coking coal on the State wise Coking Coal resources as on steel industry; d. whether the Government pro01.04.2018 (in Million Tonne) poses to acquire coking coal reserves sites in State

Proved

Indicated

Inferred

Total

West Bengal

775.75

423.68

139.76

1339.19

Jharkhand

17880.95

11284.39

1660.09

30825.43

Madhya Pradesh

354.49

1560.11

272.83

2187.43

Chhattisgarh

70.77

99.25

0.00

170.02

Assam

0

0.39

0

0.39

Total

19081.96

13367.82

2072.68

34522.46

(b): As per Coal Directory of 2016-17 and provisional coal statistics of 2018-19 & 2019-20 (till April 2019) published by Coal Controller’s Organization, the quantity of coking coal imported into the country during last three years and the current year is as follows: Year

Qty. of Imported Coking Coal (In Million Tonne)

Value (in Million Rs.)

2016-17

41.644

412301.00

2017-18

47.003

595226.36

2018-19

51.838

720497.64

2019-20 (Till April’19)

4.186

56946.90

26 | CCAI Monthly Newsletter October 2019

(c): Coking coal constitutes 40-45% of the total cost of steel production through the Blast Furnace route. Any increase in cost of coking coal adversely affects the cost of steel production. (d)-(e): In order to meet the demand of coking coal for steel sector, Coal India Limited (CIL) has taken initiatives to acquire coking coal assets abroad, with particular focus in Australia and Canada, with a view to import the produces to India and enhance raw material security of the country. Certain assets have been identified.

The acquisition process will entail conducting detailed due diligence and closure of the commercial deal. The time required for such process is asset specific and therefore it is not possible to indicate any specific time period by which such deal can be closed. No specific amount of fund has been earmarked for the said purpose but the same will be arranged once the investment proposal for any specific asset has been finalized. (f): In order to increase the availability of coking coal, following are the steps taken by the coal companies: I. Re-categorisation of Coking coal grade: Notification of additional 2 coking coal grades viz.

W-V & W-VI

(a) whether the Government imports coking coal from Australia, Canada and the United States; (b) if so, the percentage of coking coal imported from these countries; (c) whether the Government aims to reduce the percentage of coking coal imported from Australia; (d) if so, the details on the percentage amount of decrease in the amount of coking coal imported from Australia; and (e) whether the Government aims to increase or decrease the amount of thermal coal imported from Australia and if so, the details thereof?

ANSWER MINISTER OF PARLIAMENTARY AFFAIRS, COAL AND MINES (a) & (b): During FY 2018-19, import of coking coal was 51.84 MT (Prov.).

The details of coking coal imported from Australia, Canada and the United States is given below:-

II. Long term FSAs with Steel companies - 10-15 years’ linkage to Steel Sector

Country

III. Construction of 9 coking coal washeries by Coal India Limited.

IV. Three (3) tranches of linkage auction of 11.73 MT against which 3.43 MT has been booked by coking coal consumer.

Q. No. 5056. IMPORT OF COKING COAL

24.07.2019 SHRIMATI POONAM MAHAJAN: Will the Minister of COAL be pleased to state:

Imported Coking Coal (MT) in 2018-19 (Provisional) Quantity

Percentage Share

Australia

36.930

71.24

Canada

4.294

8.28

USA

4.133

7.97

Others

6.481

12.50

Total

51.838

100

(c)to(d): 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 import policy, coal is kept under Open General License (OGL) and consumers are free to import CCAI Monthly Newsletter October 2019

| 27

coal from the source of their choice as per their contractual prices on payment of applicable duty.

Government does not interfere in the process of import of coal.

Hence, 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.

Reduction in Import of coal in the country is always a priority area of the Government. In order to increasing the availability of coking coal/ thermal coal, following steps are taken by the Government:  Coal India Limited (CIL) has planned to increase coking coal production substantially.  Notification of additional 2 coking coal grades viz. W-V & W-VI.  New 9 coking coal washeries being set up by CIL by 2020-21.  Long term Fuel Supply Agreements (FSAs) with Steel companies -10-15 years’ linkage to Steel Sector.  Supply of washed coking coal to Steel sector proposed to be enhanced to meet the demand of that sector. (e): During 2018-19, the import of thermal coal from Australia was 23.52 MT. In order to increase domestic availability of thermal coal, the following steps are being taken:  CIL and its subsidiaries are going for higher capacity mega mines (Capacities > 10 MTY) with high mechanization.  CIL has already introduced state of the art technology to improve its work efficiency.

High capacity Heavy Earth Moving Machinery (HEMMs) like 42 cum Shovel with 240 T Rear Dumper have been introduced for this purpose.

28 | CCAI Monthly Newsletter October 2019

 Surface Miners have been introduced in opencast mines in a big way to improve operational efficiency & to cater environmental needs by CIL. During 2018-19, in CIL, around 50% of the opencast coal production was through Surface miners and is likely to further increase in subsequent years.

Q. No. 5119. CAPTIVE COAL BLOCKS

24.07.2019 SHRI V.K. SREEKANDAN Will the Minister of COAL be pleased to state: (a) Whether the captive blocks have suffered because of delay in land acquisition and various clearances as well as issues such as rehabilitation and resettlement and if so, the details thereof; (b) Whether in 2018-19 captive mines produced an estimated 33 million tonnes of coal; (c) if so, whether some blocks were yet to start production; and (d) if so, the details thereof?

ANSWER MINISTER OF COAL, MINES & PARLIAMENTARY AFFIARS (SHRI PRALHAD JOSHI) (a) Yes, Sir. The development of captive coal block is a major project and involves a gestation period of 3 to 4 years for obtaining various clearances from State / Centre agencies. In some cases, the development of captive coal blocks has suffered as the allocatees were not able to obtain various approval / clearances from the State / Central Agencies like Environment Clearances (EC), Forest Clearances (FC), Mining Leases and purchase /acquisition / mutation of land, etc. within the timelines prescribed in the Allotment Agreement.

(b) Total production from captive mines allocated under Coal Mines (Special Provisions) Act, 2015 and Coal Mines (Nationalisation) Act, 1973 in FY 2018-19 is 49.93 MT. (c) to (d) : Under Coal Mines (Special Provisions) Act, 2015, total of 68 captive coal mines have been allocated. Out of these 68 coal mines, 29 have got Mine Opening Permission. Out of these 29, production has commenced in 17 coal mines. In the remaining 12 coal mines, 4 coal mines are in the process of removal of overburden, 5 coal mines have got Mine Opening Per-

mission in March-April, 2019 only and in case of 3 coal mines court cases pertaining to Mine Developercum-Operator are pending in various Courts.

Under the provisions of the Mines & Minerals (Development & Regulation) Act, 1957, 10 captive coal blocks have been allocated out of which none has commenced production.

Further, under the provisions of the Coal Mines (Nationalisation) Act, 1973, 4 captive coal blocks remain allocated out of which 3 are under production.

RAJYA SABHA

Q. No. 3182. SHAKTI SCHEME

22.07.2019 Will the Minister of COAL be pleased to state: (a) the salient features of the Shakti Scheme and the present status of its implementation in the country and details of those eligible under the scheme; (b) the list of eligible States under the scheme at present; (c) whether State of Maharashtra is eligible under the scheme at present; and (d) if so, the details thereof?

ANSWER (a) and (b): The Government approved the fading away of the existing Letter of Assurance (LoA)-Fuel Supply Agreement (FSA) regime and introduced Scheme for Harnessing and Allocat-

ing Koyala (Coal) Transparently in India (SHAKTI), 2017, which was issued by Ministry of Coal on 22.05.2017. The Government also approved amendments to the SHAKTI Policy, 2017, which was issued by Ministry of Coal on 25.03.2019.

Salient features of the SHAKTI policy as amended are as under: A. FSA may be signed with pending LoA holders after ensuring that the plants are commissioned, respective, milestones met, all specified conditions of the LoA fulfilled within specified time frame and where nothing adverse is detected against the LoA holder. Further, it has allowed continuation of the existing coal supply to the capacities of about 68,000 MW at the rate of 75% of Annual Contracted Quantity (ACQ), which may further be increased in future based on coal availability. The policy has enabled coal supplies at 75% of ACQ against FSA to about 19,000 MW capacities which have been delayed in commissioning, provided these plants are commissioned within 31.03.2022. The medium CCAI Monthly Newsletter October 2019

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term PPAs to be concluded in future against bids invited by DISCOMS have also been made eligible for linkage coal supply.

B (i). Coal India Limited (CIL)/ Singareni Collieries Company Limited (SCCL) may grant coal linkages to State/Central Gencos/Joint Ventures at notified price on the recommendations of Ministry of Power.

B (ii). Linkages to Independent Power Producers (IPPs) having Long Term Power Purchase Agreement (PPA) based on domestic coal where IPPs participating in auction will bid for discount on the tariff (in paise/unit).

Bidders who could not participate in the linkage auction under B (ii) due to any reason may be allowed to participate in the B (ii) auctions of this policy.

Further, the bidders who could not secure linkage for full ACQ may obtain linkage for the balance quantity by participating in future auctions at a later stage under B (ii) after benchmarking discount.

B (iii). Linkages to IPPs/ Power Producers without PPAs shall be on auction basis.

B (iv). Coal linkages may also be earmarked for fresh PPAs, by pre-declaring the availability of coal linkage with description, to the States.

States may indicate these linkages to DISCOMS/State Designated Agencies (SDAs).

B (v). Power requirement of group of States can also be aggregated and procurement of such aggregated power can be made by an agenc designated by the Ministry of Power or authorized by such States on the basis of tariff based bidding.

B (vi). Linkages shall be granted for full normative quantity to Special Purpose Vehicle (SPV) incorporated by nominated agency for setting up Ultra Mega Power Projects (UMPPs) under Central Government initiative through tariff based competitive under the guidelines for de-

30 | CCAI Monthly Newsletter October 2019

termination of tariff, on the recommendation of Ministry of Power.

B (vii). Ministry of Coal in consultation with Ministry of Power may formulate a detailed methodology of a transparent bidding process for allocating coal linkages to IPPs, having PPAs based on imported coal, with full pass through of cost saving to consumers.

B (viii). (a) Power plants with no PPA are allowed coal linkage under B (iii) & B (iv) for a period of minimum 3 months upto a maximum of 1 year for sale of power generated through the linkage in Day Ahead Market (DAM) through power exchanges or in short term through Discovery of Efficient Energy Price (DEEP) portal. (b) Use of existing coal linkage for sale of power through short term PPAs using DEEP portal or power exchange by the generator which terminates PPA in case of default in payment by the DISCOM for a maximum period of 2 years or until they find another buyer of power under long /medium term PPA whichever is earlier. (c) Coal linkage under B (v) also applicable in cases where the nodal agency designated by the Ministry of Power aggregates/procures the power requirement for a group of states even without requisition from such states. (d) Central and State generating companies can act as an aggregator of power of stressed power assets. (e) Mechanism to ensure servicing of debt. As of now, coal linkages to following capacities have been granted under Para A (i), B (i) & B (ii) of the policy:  A(i): Clearance has been given for signing of FSA for 9 power plants with a total capacity of 5,890 MW.  B(i): 18 TPPs have been granted linkage for a total capacity of 22,160 MW.  B(ii): First round of linkage auction under B(ii)

of SHAKTI policy was conducted in Sep’17, 730.35 MT (Provisional) in 2018-19. Absolute increase in all India coal production from 2013-14 whereby 27.18 MT of annual coal linkage was to 2018-19 is 164.58 MT as compared to an inbooked by ten provisional successful bidders crease of coal production of 73.01 MT between for 9,045 MW capacity. Second round of B (ii) 2008-09 and 2013-14.

Auction has been concluded by Coal India Limited on 24.05.2019. During this second round Coal India Limited (CIL) has also increased its quantity of 2.97 MT of annual linkage has been production from 462.41 MT in 2013-14 to 606.89 MT in 2018-19. Absolute increase of 144.48 MT booked by 8 bidders. as compared to increase of coal production of (c) and (d): All the States/UTs including State of 58.68 MT between 2008-09 and 2013-14.

Maharashtra are eligible under SHAKTI policy (b): In order to meet the domestic demand, there subject to terms and conditions mentioned in is a plan to increase the total production of coal the policy. in the country to the level of 1 Billion Tonnes by

Q. No. 3184. FULFILLING THE DEMAND OF COAL

22.07.2019 SHRI P.L. PUNIA: Will the Minister of COAL be pleased to state:

the year 2022-23.

In addition, CIL has taken the following steps to increase domestic coal production:  CIL and its subsidiaries are going for higher capacity mega mines (Capacities > 10 MTY) with high mechanization.

 CIL has already introduced state of the art tech(a) whether it is a fact that the domestic pro- nology to improve its work efficiency. High caduction of coal is not sufficient to fulfil the de- pacity Heavy Earth Moving Machinery (HEMMs) mand of fuel in India, if so, the details thereof ; like 42 cum Shovel with 240 T Rear Dumper have been introduced for this purpose. (b) action plan chalked out by Coal India Limited to fulfil the rising fuel demand in the coun-  Surface Miners have been introduced in opencast mines in a big way to improve operational try; and efficiency & to cater environmental needs by CIL. (c) whether it is a fact that Coal India Limited is acquiring the coal mines in Australia, if so, the During 2018-19, in CIL, around 50% of the opencast coal production was through Surface mindetails thereof? ers and is likely to further increase in subsequent years.

ANSWER  In underground mines, basic thrust is on MINISTER OF PARLIAMENTARY AFFAIRS, mechanization of coal winning/loading system, COAL AND MINES (SHRI PRALHAD JOSHI) coal drilling & supporting system, coal evacuation system etc. High capacity Load Haul dumps (a): The gap between demand and supply of (LHDs), Side Discharge Loaders (SDLs) & Univercoal cannot be bridged completely as there sal Drill Machines (UDMs) in conjunction with is insufficient domestic availability of coking belt conveyors have been introduced wherever coal and power plants designed on imported possible. coal will continue to import coal in the country for their production. However, there has been (c): Some coking coal assets in Australia, where a consistent effort to increase domestic coal sale of equity stakes along with life- of- mine offproduction. The all India raw coal production take rights is available, has been identified by CIL has increased from 565.77 MT in 2013-14 to for equity investment.

CCAI Monthly Newsletter October 2019

| 31

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 * The country’s overall thermal coal import is likely to cross the 200-million tonnes (MT) mark in the current financial year, according to Icra.

Coal India Ltd’s (CIL) production might fall short of its 2019-20 target of 660 million tonne (MT) by around 55-75 MT, Icra. * Coal India Ltd which witnessed a 6-per cent drop in production at around 241 million tonnes (mt) during April-September is hopeful of regaining its production tempo in the remaining part of the year. Torrential rainfall across locations affected the company’s coal production and off-take, particularly in September, said a press statement issued by the company. * Coal India has managed to command a 82% premium over notified prices for coal sold through spot e-auctions conducted during September. For the period April-September, the company managed to command a premium of 67% over its notified prices on an average. At special forward e-auction for the power sector, Coal India managed to sell coal at a premium of 27% over notified prices in September. For the April-September period, the company managed to command average premium of 32% over notified prices. There was no exclusive auction for the non-power sector.

RAILWAYS

32 | CCAI Monthly Newsletter October 2019

*Freight loading of the Indian Railways has declined for second straight month at record high pace of 6.6% in September 2019 over September 2018, since we have data for last 166 months. Also, the monthly freight loading has dipped to 36-months low level of 88.55 million tonnes (mt) in September 2019. Earlier, the freight loading had declined 6.1% in August 2019 and 4.2% in November 2015. * Railways Q2 freight earnings down by Rs 3,901 cr; passenger fare income dips by Rs 155 cr: RTI. The Indian Railway seems to have been hit hard by the economic slowdown with the earnings of the national transporter suffering a dip of Rs 155 crore and Rs 3,901 crore in passenger and freight fares respectively in the second quarter of the current fiscal, compared to the previous one, according to an RTI reply.

POWER * The government has launched a portal for better coordination among the ministries of power, coal and Indian Railways for coal supply to power plants. The Prakash portal – ‘Power Rail Koyla Availability through Supply Harmony’ – will enable all stakeholders to monitor coal right from mines to transportation, power Secretary SC Garg said. This is a laudable project in ensuring adequate availability optimum utilisation of coal at thermal power plants, Coal Secretary Anil Jain said.

* The government is considering extending special loans to state power distribution companies to help clear their rising dues to power generators. Discoms had accumulated dues of Rs 72,862 crore at end-June, of which Rs 53,476 crore is overdue. They owe another Rs 9,735 crore to renewable power firms, power ministry data showed. * Stating that the ‘coal versus renewable energy’ debate is “based on the wrong premises”, power minister RK Singh said the perspective of this issue “needs to be reformulated”. He further said keeping in mind the issue of climate change, the country has already “more than tripled the renewable energy capacity in the last four years”. “If we cut down emissions from coal, the effect would be the same,” Singh said, speaking at an inter-ministerial panel at the India Energy Forum by CERA Week held here.

CEMENT * All-India average cement prices increased around 3.2 per cent YoY to INR305-310/50kg bag (US$4.29-4.36/50kg bag) in September 2019. In particular, the improvement was led by a recovery in southern India which saw prices rise by 1.9 per cent YoY and 4.8 per cent MoM.

STEEL * India has imposed a provisional $29-$200 a tonne anti-dumping duty to rein in burgeoning and predatory imports of galvalume steel products from China, Vietnam and Korea which were causing material injury to the domestic industry. The duty will remain in effect for six months.

MONTHLY SUMMARY OF IMPORTED COAL & PETCOKE Coal Price Index COAL

(kcal/kg)

Monthly Price - FOB

Monthly Price - FOB

Monthly Change (USD)

South Africa

6000 NAR

USD 64.93

INR 4609

1.92

South Africa

5500 NAR

USD 51.46

INR 3653

1.14

Australia

5500 NAR

USD 52.04

INR 3694

0.81

Indonesia

5000 GAR

USD 48.57

INR 3448

0.44

Indonesia

4200 GAR

USD 34.29

INR 2434

0.50

USA

6900 NAR

USD 48.09

INR 3414

- 0.30

PET COKE

Sulphur

India-RIL(Ex-Ref.)

-5%

INR 6900

Price

Saudi Arabia (CIF)

+ 8.5%

INR 5055 ($71)

USA (CIF)

- 6.5%

INR 5211 ($73)

Exchange Rate

Change (Monthly)

USD/INR 70.99

-0.01

Coking Coal Price: Premium Low Vol

FOB Aus CFR China 148.53

162.60

Low Vol PCI

Mid Tier PCI

FOB Aus

HCC 64 MID Vol

CFR China

FOB Aus

Semi Soft

FOB Aus

FOB Aus

CFR India

MET COKE 62% CSR

125.53

139.73

79.40

91.00

89.00

279.90

FOB N China 279.70

CCAI Monthly Newsletter October 2019

| 33

South Africa: * South Africa coal exports were 5.54 million mt in August, up 12% on the month but down 16% on the year, according to the latest customs data.

India, Pakistan and South Korea accounted for 77% of all exports, although growing demand from Southeast Asia was still notable, as were some more opportunistic trade flows to Northwest Europe..

Australian Coal News:

* China’s restrictions on Australian coal are expected to remain in place into next year as Beijing seeks to moderate a spike in foreign imports of the commodity to protect domestic supply. * Australia hopes to expand coal exports in southeast Asia ‘delusional’, experts say. The number of new coal-fired power plants starting construction across south-east Asia has fallen markedly over the past two years as Australia has increasingly looked to the region to expand its thermal coal exports. .

Indonesian Coal News:

* The global collapse in coal prices this year has dealt a particularly heavy blow to miners in Indonesia, the top exporter and one of the largest producers of the fuel. Bonds from the country's financially weak miners have suffered more than peers elsewhere in Asia due to a lack of diversification and state backing that many competitors enjoy. Prices of thermal coal -- the kind burned by power plants -- have slumped about 33 per cent this year, and at least four US firms have gone bankrupt. * Indonesian low-CV thermal coal prices were assessed to be steady amid stable offer levels and slower production at some mines, market sources said. Offers for Supramax cargoes of Indonesian 4,200 kcal/kg GAR – or 3,800 kcal/kg NAR- coal were heard at $35.50/mt FOB Kalimantan and above for November and December loading.

US Coal News:

* Although the seaborne thermal coal market had a slight price rebound during the third quarter, US exports are expected to remain low this year, forcing more production cuts and consolidation as the domestic market remain bearish as well, analysts said.

34 | CCAI Monthly Newsletter October 2019

* Low CIF ARA prices are expected to continue pulling US thermal coal exports lower over the second half of the year and into next year, with total 2019 exports expected to be down nearly 10 million mt year on year at 39 million mt, according to a report by sources.

Pet Coke News: * Extensive utilization of petroleum coke in various end-use industries such as power generation, cement, steel, aluminum and other industries are majorly fueling the growth of the global pet coke market.

Increasing energy consumption is leading to the rapid development of power generation industry, which in turn is propelling the expansion of the global pet coke market. Rise in exploration activities of petroleum in order to fulfill the growing demand for energy and increasing adoption of low emission fuel are some of the other factors that are driving the growth of the global pet coke market.

Shipping Update: * Coal shipments handled by India’s 12 major staterun ports during April-September rose by 15.25 per cent to 29.29 million tonne (MT), according to a ports’ body.The state-run ports had handled 25.41 MT of coking coal cargo in the corresponding period of the previous fiscal.Shipments of thermal or steam coal, however, declined by 13.20 per cent to 44.87 million tonne, the Indian Ports Association (IPA) data showed. * Slowing vessel arrivals and some export activity have seen coal inventories at northwest European dry bulk terminals decline 5% from last week’s multiyear high of more than 7.3m tonnes. Stocks at four key Amsterdam, Rotterdam and Antwerp dry bulk terminals were pegged this week at 6.96m tonnes, the lowest since mid-September but still more than 20% higher on the year. * Australian coal exports are on the rise this year, with China and South Korea proving to be the preferred markets so far. In its latest weekly report, shipbroker Banchero Costa said that “coal trade in the Pacific basin has been generally positive so far this year, and this has benefitted not only Indonesian exporters but also Australia, although to a slightly smaller extent. In the first 9 months of 2019, based on Refinitiv vessel tracking data, Australia exported 290.6 mln tonnes of coal (including both metallurgical and thermal).

36 | CCAI Monthly Newsletter October 2019

59.25

69.22

Source CEA

86.45

51.3

14

13

SEP-2019

1330000.00

6218.00

ACTUAL*

NUCLEAR

HYDRO BHUTAN IMP TOTAL

44720.00

136932.00

PROGRAM

281409.14

THERMAL

Category

TOTAL

0.00

HYDRO

BHUTAN IMP

6780.00

45399.22

NUCLEAR

1142130.00

2

1

229229.92

Target Apr 2019 to Mar 2020

Monitored Capacity (MW)

THERMAL

Category

SUMMARY- ALL INDIA

105194.5

1203.30

20790.72

4220.23

78980.25

4

ACTUAL*

54.32

59.8

15

ACTUAL SAME MONTH 2018-19

108327.5

891.72

17426.11

2651.74

87357.93

5

134.94 97.11

93.14

73.48

59.74

16

PROGRAM

80.69

57.87

17

ACTUAL*

119.31

159.15

90.41

7

% OF LAST YEAR (4/5)

63.81

59.55

18

ACTUAL SAME PERIOD 2018-19

ACTUAL*

4184.10

95994.19

24026.47

534854.76

9

PERIOD : SEPTEMBER, 2019

635806.92

3812.65

83382.17

19002.3

529609.8

10

ACTUAL SAME PERIOD 2018-19

96.88

113.61

109.84

111.45

94.22

11

103.66

109.74

115.13

126.44

100.99

12

% OF LAST % OF PROGRAM YEAR (9/10) (9/8)

APRIL 2019 -SEP 2019

680314.00 659059.52

3683.00

87398.00

21559.00

567674.00

8

PROGRAM

GENERATION (GWH)

129.95

132.53

126.77

84.93

6

% OF PROGRAM (4/3)

APRIL 2019 - SEP 2019

PLANT LOAD FACTOR (%)

112940.00

926.00

15687.00

3329.00

92998.00

3

PROGRAM

ACTUAL SAME MONTH 2018-19

SEP-2019

AN OVERVIEW

ENERGY GENERATION REPORT

OVERALL DOMESTIC COAL SCENARIO Coal Production (in MT) Company

Sept, 2019

Sept, 2018

% Growth

April - Sept,2019

April -Sept,2018

% Growth

CIL

30.8

40.3

-23.6%

241.0

256.5

-6.0%

SCCL

4.2

5.1

-17.1%

30.5

28.5

7.1%

% Growth

April –Sept, 2019

April – Sept, 2018

% Growth

Overall Offtake (in MT) Company

Sept, 2019

Sept, 2018

CIL

35.2

44.0

-20.0%

275.8

290.8

-5.2%

SCCL

4.4

5.1

-15.0%

30.5

31.0

-1.7%

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

Sept, 2019

Sept, 2018

% Growth

April – Sept, 2019

April – Sept, 2018

% Growth

CIL

28.3

35.9

-21.2%

218.4

235.0

-7.0%

SCCL

3.8

4.2

-10.5%

25.6

25.4

1.0%

Company

Coal Qty. Allocated Sept, 2019

Coal Qty. Allocated Sept, 2018

Increase over notified price

Coal Qty. Allocated April - Sept, 2019

Coal Qty. Allocated April Sept, 2018

Increase over notified price

CIL

1.97

2.58

82%

11.25

17.69

67%

Spot E-auction of Coal (in MT)

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

Coal Qty. Allocated Sept, 2019

Coal Qty. Allocated Sept, 2018

Increase over notified price

Coal Qty. Allocated April - Sept, 2019

Coal Qty. Allocated April - Sept, 2018

Increase over notified price

CIL

3.62

3.17

27%

10.93

20.38

32%

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

Coal Qty. Allocated Sept, 2019

Coal Qty. Allocated Sept, 2018

Increase over notified price

Coal Qty. Allocated April - Sept, 2019

Coal Qty. Allocated April - Sept, 2018

Increase over notified price

CIL

0.00

0.00

-

2.31

7.30

33%

Company

Coal Qty. Allocated Sept, 2019

Coal Qty. Allocated Sept, 2018

Increase Over notified price

Coal Qty. Allocated April - Sept, 2019

Coal Qty. Allocated April - Sept, 2018

Increase Over notified price

CIL

-

0.50

-

0.66

0.50

30%

Special Spot E-auction (in MT)

CCAI Monthly Newsletter October 2019

| 37

PRODUCTION AND OFFTAKE PERFORMANCE OF CIL AND SUBSIDIARY COMPANIES COAL PRODUCTION (Figs in Mill Te) SUB CO.

OCT'19

APR'19 - OCT'19

ACTUAL ACTUAL THIS SAME % YEAR PERIOD GROWTH LAST YEAR

ACTUAL THIS YEAR

ACTUAL SAME PERIOD LAST YEAR

% GROWTH

ECL

3.24

3.78

-14.4

24.07

24.22

-0.6

BCCL

1.78

2.2

-19.1

13.47

16.78

-19.7

CCL

4.26

5.77

-26.2

26.95

28.56

-5.6

NCL

9.34

8.65

8

60.34

57.03

5.8

WCL

4.17

4.76

-12.4

21.62

21.37

1.1

SECL

8.89

12.8

-30.6

69.6

85.04

-18.1

MCL

7.65

11.76

-34.9

64.17

72.97

-12.1

NEC

0.03

0.06

-40

0.14

0.27

-46.1

CIL

39.35

49.78

-20.9

280.36

306.24

-8.5

OFFTAKE (Figs in Mill Te) SUB CO.

OCT'19

APR'19 - OCT'19

ACTUAL ACTUAL THIS SAME % YEAR PERIOD GROWTH LAST YEAR

ACTUAL THIS YEAR

ACTUAL SAME PERIOD LAST YEAR

% GROWTH

ECL

3.17

3.71

-14.5

25.72

26.21

-1.9

BCCL

1.86

2.49

-25.4

15.79

19.55

-19.2

CCL

4.87

5.59

-13

37.47

37.56

0.6

NCL

9.37

8.93

4.9

60.62

58.14

4.3

WCL

3.93

4.78

-17.9

27.44

29.96

-8.4

SECL

9.37

12.56

-25.4

77.11

89.03

-13.4

MCL

7.92

11.87

-33.2

71.87

80.33

-10.5

NEC

0.03

0.04

-15.8

0.23

0.29

-22.3

CIL

40.5

49.96

-18.9

316.26

340.76

-7.2

38 | CCAI Monthly Newsletter October 2019

CCAI Monthly Newsletter October 2019

| 39

REGISTERED

40 | CCAI Monthly Newsletter October 2019