CIL’s Coal Supply to Power Sector Drops 6% Y-o-Y in FY20

CIL’s coal dispatch to the power stations has decreased 6% on the year to 463 MnT in FY20, on account of subdued demand for electricity. The miner had supplied 491.5 MnT coal to the power sector in the previous fiscal.

The lower coal off-take was largely affected by slowdown in industrial activities, which resulted in a decline in electricity generation. Data provided by power ministry showed that power output from coal fired plants had dropped 2.5% Y-o-Y to 962.85 BU in FY20 as against 987.68 BU in FY19.

Eventually, coal consumption by the power plants was marginally reduced to 622.22 MnT in FY20 compared with 628.94 MnT in FY19. It is to be noted that power plants procure fair amount of domestic coal from other miners excluding CIL, apart from catering ingenious supply from the captive mines.

As a matter of fact, coal dispatch by Telangana based miner-SCCL had also noted a fall to the power sector, which was recorded at 52.95 MnT in FY20 against 55.38 MnT in FY19.

Dispatch to non-power sector:

Lower demand from power sector presented CIL with a chance to liquidate arrear coal rakes of non-power sector during FY20. The miner had increased coal dispatch to non-power sector by 2% Y-o-Y to 118.66 MnT.

No such improvement was seen in case of SCCL who had recorded a 22% drop in coal supplies to the non-power sector.

Excessive stock pose threat to CIL’s growth:

Despite failing to post a growth in annual dispatch volume, CIL had made frantic efforts to raise supplies to the power plants lately by delivering coal in excess of 40 MnT during each of the last 4 months of FY20.

However, with near correction in demand weaken by the imposed lock-down, coal stock at the power plants have reached an unprecedented level by crossing the 50 MnT mark. As on 28 Apr’20, coal stock at power plants having coal linkages, was assessed at 50.747 MnT, enough for 31 days of power generation.

It is expected that the excessive stock would lessen buyer’s urgency to procure additional supplies thereby affecting CIL’s growth plan for the fiscal.