CIL eyes supply contracts with power plants to increase sales

KOLKATA: Coal India hopes to increase sales from supply contracts that will be auctioned to power plants, which will help reverse sluggish sales.

“A 1,000 MW power plant requires around 4.5 million tonnes of coal a year. If we are able to supply coal to these plants that do not have any contract, sales could rise by about 200 million tonnes,” a company executive said.

An estimated 50,000 MW of thermal capacity does not have any supply contract from Coal India. Of these, 9,000 MW has already achieved commercial operation with coal received from ad hoc sources while 41,000 MW will come up by 2020.

These plants need about 225 million tonnes of coal per year. Another set of 30,000 MW of power plants are in the pipeline. They have coal supply contracts in place and will require 135 million tonnes of coal. Coal India also plans to offer around 130 million tonnes of coal through the eauction route.

In 2016-17, it produced 555 million tonnes against its target of 597 million tonnes. Production target for 2017-18 has been set at 660 million tonnes. “We are banking on the longterm coal supply contract auctions, the norms for which are likely to be notified soon,” a senior Coal India executive said.

“Once auctions for long-term contracts for power plants are started, sales are likely to rise, which would help enhance production. Coal India has not been able to produce at its targeted levels because sales were not as estimated, leading to stock accretion issues at both pit-heads and power plants,” the executive said.

At one time during the last fiscal, cumulative stocks at power plants and pit-heads had touched nearly 100 million tonnes because power demand was not as anticipated, he said.

Coal India Ltd