Coal India foresees 53-MT shortage in FY26 at 100 pct supply level

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Published: August 31, 2019 2:56:15 AM

On June 24, CIL made a presentation to the Union coal ministry on the coal balance scenario based on the projected demand of the fuel.

Coal India, power purchase agreements, Adani Power, coal supply, coal supplyShortages would persist even if it is able to meet the FY26 production target of 1,000 MT.

Coal India (CIL) has estimated that coal supplies by it by the end of FY26 will be lower than what is required to meet 100% of its committed volumes to buyers by 53.3 million tonne (MT). Shortages would persist even if it is able to meet the FY26 production target of 1,000 MT.

However, the company would have a surplus availability of 40.8 MT in FY24, if it supplies at ‘trigger level’ — a technical jargon for assured minimum commitment volume. The surplus is contingent on CIL producing 880 MT in FY24.

On June 24, CIL made a presentation to the Union coal ministry on the coal balance scenario based on the projected demand of the fuel. Apart from the fuel supply agreements (FSAs) already tied up with various power plants, the CIL presentation also takes into consideration the possible future commitments under Presidential directives for electricity generation capacities which currently have no power purchase agreements (PPAs) and FSAs.

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According to the presentation, CIL shortages at 100% annual contracted quantity (ACQ) supply are estimated at 262.4 MT, 184.9 MT, 114.9 MT and 53.3 MT in FY20, FY23, FY24 and FY26, respectively. Shortages at trigger level are seen to be at 111.3 MT and 24 MT in FY20 and FY23, respectively. CIL produced 607 MT of the fuel in FY19, recording an annual growth of 7%.

As per government norms, ‘trigger level’ of CIL is 90% of the ACQ for power plants commissioned before 2009, and 75% of ACQ for generation units that came up after 2009. Since the requirement of the power plants keep on varying from time to time, there are situations when some of them do not receive adequate coal when they want to run at full capacity. On the other hand, many plants receive much more coal than their commitment levels during demand spurts.

To cut import bills and improve coal supply, the Cabinet on Wednesday allowed 100% foreign direct investment through the automatic route for sale of coal in the open market, in a critical step that will result in culmination of a February 2018 decision allowing auction of coal-bearing blocks to private parties for commercial mining. Even though domestic coal production has improved in recent years, the rising demand for the fuel had led to a surge in coal imports — shipments surged from 190 MT in FY17 to 235 MT in FY19.

Power plants across the country imported 23.4 MT of the fuel in April-July, 2019, up 33.8% year-on-year. Out of this, 15.1 MT was received by power plants which are designed to run only on imported coal. Such plants of Adani Power and Tata Power located in Mundra, Gujarat — each more than 4,000 MW capacity — cumulatively imported 9.5 MT of coal in in the four-month period, 86% higher than the same period last year. Other electricity generation units in the country, which import the fuel to blend with domestic coal, imported 8.3 MT, recording a rise of 26.5%.

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