Indian Power PSUs to Stop Coal Imports

Come FY18, coal imports into India by public sector power producers will come to naught. The Government of India (GoI) has mandated the state-run power companies in the country to shun imported coal and instead use domestic coal from the onset of the next fiscal. The mandate is clearly intended to dispose off the domestic coal production in the country, and at the same time, bring down imports to restrict foreign exchange outgo.

Anil Swarup, the former Coal Secretary in the GoI, said in a recent seminar at Kolkata that there will be no coal imports by the state-run power producers in India after 31 Mar’17. To achieve the objective, a detailed analysis of methodologies to handle reduction of coal imports has already been worked out that involved unit-by unit assessment, he said.

Swarup also said that the cumulative coal imports by Indian power companies, owned by the center as well as the states, were at 35-40 mnt in FY16, and the imports will come down further by 15 mnt by the end the current fiscal on account of better supply mechanism.

Unlike the situation in the earlier years, when Indian power producers had to struggle to procure domestic coal due to shortage in domestic production, the situation is now the reverse. There has been a dramatic shift in the domestic coal production scenario as a consequence of the dedicated efforts of the GoI, resulting in coal production in the country in excess of the current demand. Power producers in the country now have excess coal inventories. Although, the higher output is also retarding coal sales of the country’s largest miner – Coal India Limited (CIL).

Non Coking Coal Production Vs Imports Trend in India

Continuing its coal production schedule intact, CIL has set a production target of 598.6 mnt for FY17. The state-run coal miner has targeted to reach a massive production target of one billion tonne by FY20.

Continuing its coal production schedule intact, CIL has set a production target of 598.6 mnt for FY17. The state-run coal miner has targeted to reach a massive production target of one billion tonne by FY20. neighboring country – Bangladesh. In this regard, Anil Swarup said that officials of the state-run miner, CIL, were in talks with prospective buyers in Bangladesh, but the negotiating efforts were in progress and conclusive outcomes have not been attained yet.

Post the mandate for the government-owned power companies to stop importing coal with the start of FY18 coming into force, around 40 mnt of coal import will vanish from the country’s annual import basket.

During FY14, FY15 and FY16, the annual non-coking coal imports into India were 137.25 mnt, 183.72 mnt and 167.76 mnt respectively.

The import quantity is also likely to decline further after FY17, as the Coal Ministry is exploring ways to improve the quality of domestic coal to bring in other industries, like steel, into usage of domestic coal.

CIL has proposed a rule to conduct coal quality tests through third party sampling. The quality parameters will be based on the test results of the third party, and not what CIL claims. Moreover, 15 more coal washeries will be set-up in the country.

CIL has proposed a rule to conduct coal quality tests through third party sampling. The quality parameters will be based on the test results of the third party, and not what CIL claims. Moreover, 15 more coal washeries will be set-up in the country.

Source: Steel 360 Magazine Dec’16 Issue