Coal India Misses Production Target Third Time in Row in FY16

Largest Indian coal producer, CIL has produced about 1.7 MnT less coal than targeted in July’15. However, the production is up by about 5.5% Y-o-Y basis.

Amid huge annual Indian coal demand, assessed at about 910 MnT for FY16, CIL has again missed its production by about 3% for July’16. The firm has produced about 34.83 MnT coal against targeted 36 MnT. It produced about 40.9 MnT and 38.8 MnT of coal in May’15 and June’15, missing production targets by 4 and 5% respectively. NCL emerged as the star performer for the month among all eight subsidiaries of CIL, achieving the production target by 108%

CIL’S Production in FY’15 & FY’16 M-o-M

According to the latest release by Indian coal ministry, annual coal demand for FY16 has grown up to 910 MnT. Centre has planned about 550 MnT of coal production from CIL, and about 150 MnT from SCCL and other captive blocks. Whereas has planned about 210 MnT from import by fuel starved sectors including both regulated and non-regulated sectors. SteelMint has assessed that India has imported about 18.2 MnT of coal in July’15 till latest updates.

Reasons for Demand-Supply Gap of Indigenous Coal

1.  The most significant reason for the aforementioned gaps is unavailability of needed grade of coal required to fuel the needy sectors like steel and sponge industry. The coal available in India is relatively low grade coal than required in the consuming sectors . This compels the players in different sectors to fulfill their dry fuel requirements through imports.
2. Odisha and Jharkhand have been identified as leading states for coal reserves in India. Infrastructural constriction and operational choke-points in coal transportation from these two states have remained as significant factors stimulating demand-supply gap of indigenous coal .

To overcome the problem of rail base for coal transport, MoUs have been signed by states of Chhattisgarh, Jharkhand and Odisha and coal companies. The above move will definitely prove to be an important step to solve the existing problem to certain extent.