CIL Will Have to Wait For its Ambitious Export Policy

CIL’s proposal to export coal seems to be in jeopardy as the miner vows to fulfill its commitment in domestic market first before going ahead with the expansion plan.

India’s largest coal miner was seeking a policy on coal exports before finalising the commercial contracts, but after facing steep challenge to supply adequate coal domestically, the miner’s export plan for now have been aborted.

CIL has been exporting very small quantity of coal through bilateral contracts, and was in talks to raise the export volume by delivering its coal to Nepal, Bangladesh and Bhutan.

As per the data provided by CIL’s annual report, the company had exported mere 0.014 MnT coal in FY16, which was almost negligible as compared to the total coal dispatch of 534.624 MnT recorded in the period. (The company has not mentioned export figures in its FY17 and FY18 annual reports).

The talks of coal exports had gathered pace when pithead coal stock at CIL had rose to 70 MnT in May’17, however, after witnessing a surge in demand domestically, coal stock have now reduced to 23 MnT.

Last year’s sudden surge in demand from power sector arising from fall in hydro power had also made coal insufficient for non-power sector, which were catered by strong imports in the year.

Hydro power output have been encouraging this year, as it had posted higher growth Y-o-Y in Aug’18, thereby halting the coal consumption growth at thermal power plants. However, last year power generation figures suggest that hydro output is likely to decline moving forward down the year, which means the load of rising power requirement would again be lowered on thermal power plants.

CIL has been clearing off previous year’s coal supply dues by increasing its dispatches this year, but it will certainly need some time before the company completely meets the rising coal demand in the country.

CIL’s ambitious prospect to export coal would be perfect for creating long term market overseas, especially when its domestic market share is in threat with Commercial mining knocking the door; but for now it seems that the company will have to wait.