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Coal India Ltd (CIL) faces a challenging situation as there is a steep hike of 45 million tonnes in its output target for the current fiscal at 507 million tonnes over last year. This has come at a time when thermal stations - unlike in 2012-13 when the country faced a power crisis owing to poor coal supply - have adequate supply of the dry fuel and there does not seem to be much demand for it in near future.

After having achieved 462 million tonnes of production target in FY14, the Government has now asked CIL to achieve an incremental output target of 507 million tonnes in the current fiscal and an offtake target of 520 million tonnes. According to industry sources, a steep hike of 45 million tonnes in production target for CIL could be a challenge for it, as power stations currently have sufficient coal with them and are not facing a crisis of the magnitude of 2012-13 when the country had almost reached a power crisis like situation.

In such a scenario, they added that if some of CIL's subsidiaries like Mahanadi Coal Fields (MCL) and Eastern Coal Fields (ECL) spruce up their performance in terms of output, then the target could be within achievable limits. Though CIL on its part is banking on its ambitious railway projects in Chhattisgarh, Odisha and Jharkand, to improve its offtake of coal, these are still under construction and sources said that their completion is expected only by 2015-16.

These projects namely Tori-Shivpuri-Kathotia in North Karanpura, Jharkhand; Bhupdeopur-Korichhapar to Mand Raigadh mines in Chhattisgarh; and Barpali-Jharsuguda in Ib Valley situated in Odisha, are being constructed at a fast pace through partnership between CIL and Indian Railways. However till these become fully functional, the Maharatna company, sources said, would have to wait to improve its offtake.

Improved offtake will automatically expedite CIL's production, till then it will have to look into ways to improve the production of its subsidiaries, especially MCL and ECL. While there are power stations which have sufficient coal, those which are facing a shortfall are not able to buy the essential dry fuel as they don't have any power purchase agreements (PPAs) in place which would allow them to buy it from distribution companies. These stations have to fall back on Government companies for purchasing coal, however state-owned entities are selling the fossil fuel at high rates, thus discouraging shortage facing stations from buying it. This sums up the peculiarity of the situation regarding availability of coal.

Though CIL Chairman S Narsing Rao in March this year had agreed that only a few thermal stations in the southern part of the country were facing coal shortage in an otherwise prevailing problem of plenty, he agreed that achieving the target for the current fiscal would be a challenge. The production target for 2013-14 was 482 million tonnes and Rao said that with this going up to 507 million tonnes, the asking rate was close to 10.

Sources privy to the development said that the need of the hour for CIL in order to achieve the target for the current fiscal would be to optimally utilise its resources as last year its production had to face problems arising out of cyclone Phailin, delay in environmental clearances for its projects and issues arising out of evacuation of coal.

Source-On Request