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Coal India's falling Supply to fertiliser, cement firms leads to output drop

Supplies from Coal India have dwindled in June for consumers other than thermal power plants, leading to a decline in output. They say CIL has sent only a fraction of the coal it's scheduled to dispatch this month. Even captive power producers are affected along with sectors such as cement, fertiliser and sponge iron.

Members of the Coal Consumers' Association said CIL has been sending them only about 10-20 Percent of the contracted amount. Some of the larger companies are scrambling for imported coal, which takes at least a month to arrive. "Due to the deteriorating power situation, CIL has been directed by the government to increase coal supplies to power plants. This has forced CIL to send less coal to captive power plants, cement, fertiliser and sponge iron makers," a member of the Coal Consumers' Association on condition of anonymity.

"With increasing priority for thermal power plants, Indian Railways is also not allotting the required number of rakes, which has added to the issue," he said. S Nandi, secretary, Coal Consumers' Association, said, "CIL says it is doing so at the behest of the Prime Minister's Office. However, we have not come across any such PMO directive."

Rising summer temperatures have led to increased demand for power across states, with blackouts ranging from two to five hours in many areas including Delhi. That's despite thermal power producers as well as utilities being asked to try and meet as much demand as possible.

"Coal prices in the international market have declined to a great extent on reduced demand from China and the US," said a senior executive of a company that imports coal. "At present, the landed price of coal at Indian ports is almost Rs 200 less than that of CIL's mined coal."

Large coal consumers located near ports can benefit from the price difference but those further away don't find it worthwhile to import fuel because of the added transport cost, he said. "Also, importing coal takes at least a month from the time it is ordered to delivery, thus it is not a short-term option for producers," he said.

Meanwhile, CIL's top management is unsettled with S Narsing Rao having resigned as chairman and gone on leave without having been relieved by the government. No acting chairman or replacement has been announced.

Source-On re