The Cabinet Committee on Economic Affairs (CCEA) has now permitted Coal India Limited (CIL) to import coal to make up for the shortfall in domestic availability. Coal India Chairman & Managing Director S.Narsing Rao spoke to K.R. Balasubramanyam on coal availability and how he plans to address the shortage. Edited excerpts.
Q: How short of thermal coal are we?
A: We expect the shortage this year (2013/14) to be around 120 million tonnes. Since I joined Coal India in April 2012, there has been a growth of 32 million tonnes. It was unprecedented growth. Never before has this company witnessed such a steep volume increase in off-take in a single year. Power utilities gained in a big way as we supplied 34 million tonnes more to the sector compared to the previous year. This represented an annual growth of 10.7 per cent. Earlier, the growth used to be about two to three per cent over the previous year.
Q: What are your strategies to increase supplies this year?
A: We are employing various methods such as large-scale contract mining, speeding up land acquisition, improving infrastructure at coal fields, modernizing the mines etc., so that production goes up, and the country's dependence on imports is minimal. In the first 80 days of this fiscal year, our growth in supplies to the power sector was about eight per cent compared to the same period last year. We are hoping to achieve a 10 per cent growth in coal off-take 2013/14.
Q: How is the coal stock position at generating stations?
A: As of now, things seem to be okay. The demand for coal will pick up from October after the monsoon is over. We may have to start importing then. For the last four to five months, all power stations have had 21 million tonnes of stock, which is unprecedented. It was never more than 9 to10 million tonnes. For the past four months, Rajasthan, Gujarat, Haryana and West Bengal have been requesting us not to supply coal because they have surplus stock.
Q: What about coal imports?
A: We have decided not to import coal on our own because that is not our core activity. We will approach government entities such as MMTC India Ltd, State Trading Corpation of India Limited or MSTC Ltd to help us with imports. They already have experience in handling imports, so it makes sense to place orders with them. They will import on our behalf.
Q: What about margins?
A: We don't want to keep margins on the supply of imported coal. The Coal India Board has decided to levy a service charge of two per cent. However, it is not fair on our part to make profits from coal imports. We will charge cost plus incidental charges, if any.
Q: Do you foresee buyers raising quality issues?
A: There will not be any quality issues. The supplier has to deliver coal of assured quality. There won't be any problems related to quality.
Q: What is the cost differential between Indian and imported coal?
A: On average, imported coal costs about 60-70 per cent more than domestic coal.
Q: Which countries do you plan to source coal from?
A: We will source mostly from Indonesia because the coal there is of the same quality as India's. We may also import from Australia and South Africa.
Q: Do you have sound infrastructure?
A: Entities like MMTC India Ltd have the necessary infrastructure. We don't see that as a major problem.
Q: How much is Coal India likely to produce this year?
A: Our off-take target for 2013/14 is 492 million tonnes. Of this, 379 million tonnes will be supplied to the power sector. The remaining will be sent to sectors such as cement, sponge iron, captive power plants etc.
Q: How does 2013-14 compare with last year for the power sector?
A: In 2012/13, the coal off-take was 465 million tonnes. The country's coal imports were about 100 million tonnes. About 80 million tonnes of imported coal went to the power sector, and the rest to others. Out of 106 GW (GigaWatt) of thermal capacity, Coal India's supplies accounted for 102 GW. In 2013/14, we will help fire 110 GW capacity.
Q: How is Coal India's performance on loading?
A: In 2012/13, we loaded, on average, 186.4 rakes per day as against 167.7 rakes per day in 2011/12. Thus, in 2012/13, the average loading per day increased by 18.7 rakes, a growth of 11.2 per cent. In April and May this year, the average loading per day was 191 rakes against 181 during the same period last year. This is a growth of six per cent.
Q: What is the status of the fuel supply agreements (FSAs)? How much capacity have you signed up for so for?
A: Amongst all power projects that have been commissioned since April 2009, we have signed 64 FSAs. This is for 26,200 MW (MegaWatt) for a quantity of 96 million tonnes of coal. NTPC, however, is yet to sign 29 FSAs for an quantity of 60 million tonnes. Of these 29 FSAs, 17 are NTPC's own plants. The rest are joint ventures it has with others.
Q: What about power projects that have no coal linkages?
A: We have no responsibility towards them. They are coming up with no fuel linkage. It is entirely their responsibility to arrange for fuel. We will be first looking at fulfilling the supply commitments we have already made.