Coal India to divert coal movement to fight critical stock in power plants

Coal India (CIL) has drawn up an emergency plan to regulate coal movement to the non-power sector for pushing additional coal to the thermal power plants. In the long run, it plans to redefine its priorities much on the lines of the governance practiced in Central Coalfields (CCL). Redefining priorities has helped in complete transformation of this CIL subsidiary, both in terms of physical and financial parameters.

Gopal Singh, after taking over the additional charge of CMD of CIL, is looking to replicate the Kayakalp model of governance in the long run. This model, which is based on the principles of democratic planning, delegation of power and enforcement of discipline, has resulted in a turnaround of CCL.

The subsidiary has enhanced its production from 48 mt in FY13 to 67 mt in FY17, achieving a CAGR of 10.2%. The subsidiary’s production in the current fiscal is likely to reach 80 mt, while it has targeted producing 133.5 mt by 2020. Likewise, targets of all the subsidiaries would be kept intact with a balance brought about in production and supplies.

With improvement in production, improvement in finances would also be possible by bringing about a check in the cost of production. CCL’s cost of production went up to Rs 1,046 per tonnes in FY16 from Rs 1,039 in FY12. This was virtually a decrease in the cost considering adjustment with the inflation. Profits went up to `445 per tonnes in FY 16 from Rs 228 per tonne in FY12.

“However, such programmes would be implemented for the long term but for present we are going to offer coal to the thermal power plants on ‘as is where is basis’ to fight the critical stock situation,” Singh said .

CIL plans to use the road-cum-rail mode to supply stocks from CCL, Western Coalfields, South Eastern Coalfields, Bharat Coking Coal and Mahanadi Coalfields. The generation companies have been asked to utilise flexi mode to optimise coal movement to plants with critical coal stocks,” Singh, said.

The coal behemoth has set up round-the-clock monitoring and control cells at its corporate office and its subsidiaries to monitor coal stock in the power plants on real-time basis. The monitoring plan primarily aims at coordinating with the railways and power utilities. The monitoring plan also encompasses coal production and transportation of coal from mines to the rail heads and other dispatch points. Movement of rakes with special emphasis on turn-around within free time loading allowed by the railways, condition of roads, crushing arrangements and hassle free functioning at weighing facilities would also be monitored.

Although Singh, who is also the whole-time CMD of CCL, has said that the plan of cutting down supplies to the non power sector was temporary, a CIL official said the non power sector is only getting trigger level supplies and it would be difficult to cut down further.

For the past three months, coal production has been brought down considerably following low demand from coal fired plants owing to operations at low PLF. The railways decided to reduce the number of rakes because of reduced loading coupled with the fact that power plants were maintaining low inventory to save on logistics. Supplies to the power plants have been steady but with the onset of monsoon both production and logistics were hit for which the power plants had to face critical stock situation, the official said.

Although consumer sources confirmed that supplies at present were at trigger level, sources in the consumers association said since power plants would not consume high grade coal, the higher grade mostly came to the non power sector. Diverting coal to power sector from non power sector would mean pushing costly coal to the power producer.

A CIL official said higher grade coal can substitute imports since imports have come down 19% during April — July period compared to the same period last year. Coal imports during April-July2017 were 19.29 million tonne, compared to 23.76 mt during same period last fiscal.

However, in the long run CIL would look for a balanced growth in production, although it has no plans of shelving its target of producing 1 billion tonne by 2022.