Coal Crisis Affects Hard Coke Manufacturers in Dhanbad

CIL’s decision to terminate coal supplies under FSA has hit hard the hard coke manufacturers in Dhanbad, where a number of industries are reeling under an acute coal crisis for the last one month.

Dhanbad has developed as a hub of coke manufacturing with many industries grown in the past 40 years due to the availability of good quality of coking coal in the region.

Earlier, the coke industries used to procure their coking coal demand from Bharat Coking Coal Ltd (BCCL)-a subsidiary of CIL, at notified price under Fuel Supply Agreement (FSA).

However, after seeing out the FSA contract for 2013-18 which was extended till Jun’19, CIL has discontinued FSA supply from Jul’19. Coke producers, in turn, have been asked to procure costlier coal via e-auctions.

Shedding further light on this matter Mr B N Singh, president of Industries and Commerce Association, said “More than 94 factories having 1 lakh people which are directly or indirectly affected by this decision of Coal India to withdraw FSA. The fate of the factories is at stake due to absence of coal”.

Mr Singh had also raised the issue in front of Coal minister Mr. Pralhad Joshi, seeking his attention on this matter.

Coal supplies under FSA account for 75% of the total coal requirement of the hard coke industry, which they used to acquire at notified price. The remaining 25% of the requirement was procured through e-auctions.

Total annual production of HARD COKE and PEARL COKE from the entire region of Dhanbad is estimated around 1 MnT. Most of the manufacturers are dependent on FSA which ascertain year-around coal supplies at a price comparatively lower than that from e-auctions.

Business model of CIL’s coal sales involve allotment of 90% of coal through FSA while remaining 10% of the annual production are entitled for e-auction. However, in order to generate higher revenue it is likely that they have preferred competitive bidding in e-auctions over FSA.

The ongoing crisis for coking coal is definitely a matter of concern for Coal Ministry and Coal India, which would require specific policy changes in concurrence with the local manufacturers to make a win-win situation for all.