In the wake of domestic coal shortages, Mahanadi Coalfields Ltd (MCL) has decided to regulate coal supplies to Non-power sector, in order to allocate more coal to the power consumers.
The company has notified its Non-power consumers (which procure coal through FSA, FSA through LOA route and Linkage Auction FSA) that it will allocate only 80% of the MSQ (Monthly Scheduled Quantity) for the month of Oct’17, and have asked them to acquire coal accordingly.
CIL’s coal production had increased 3% M-o-M to 37.6 MnT in Aug’17, after witnessing a two months drop. However, the marginal increase in output was not enough to meet the requirements of power plants and coal stock started to deplete drastically.
As on 28 Sep’17, the total coal available at India’s power plant is 8.73 MnT, enough for 6 days of power generation. Moreover, 20 plants are having critical coal stock of less than 7 days.
In the backdrop of limited stock, CIL had decided to increase coal supplies to power sector. MCL, whose production had recorded negative growth of 3.8% Y-o-Y during Apr’17-Aug’17, had also offered additional coal to the extent of 5% of the Annual Contracted Quantity (ACQ) to the power plants during Sep’17 from its Basundhra, Hingula and Lingaraj coal mines.
Beside, the company had also withdrawn 0.15 MnT coal quantity offered from Kulda colliery, from the total 0.977 MnT quantity reserved for Sep’17 spot auctions, to preserve more coal for power sector.
The measures taken by the government to revive coal stock at power plants, is not coming handy for sponge sector whose struggle for coal continues. Beside the domestic coal shortage, the sponge manufacturers are also affected by higher imported coal offers. Offers for South African 5500 NAR coal, mostly preferred by Sponge manufacturers, was assessed at USD 73/MT, FoB Richards Bay.
Given the robust demand for steel in the country, the rise in raw material cost would eventually passed on to the consumers, unless CIL should raise its coal productivity soon.
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