Coal Production Cut by CIL Helps to Reduce Stockpile

CIL’s coal production cut has helped to reduce excesses coal stock-piled at many power plants which has fallen by 6 MnT.

Earlier, Coal India (CIL), India’s largest coal producer had decided to cut its monthly coal production in the wake of raised coal inventory at Indian pithead power plants. The company’s decision to cut production has helped to reduce excess coal stockpile by about 6 MnT.

Since the beginning of FY17, unused coal inventory at pithead power plants had been rising sharply and reached at about 40 MnT. While, CIL’s decision to cut domestic coal production has currently led stockpiles to come down at 34 MnT. On the other hand, owing to rise in electricity demand upon ongoing summer, power stations are using their excess coal stocks creating space for fresh supplies.

Firstly, Coal India scaled back its monthly coal output to cope up with escalated inventory from couple of months. Whilst, lower offtake and higher production had compiled CIL to reduce production to clear excess stock.

It is to be noted that Indian pithead coal stocks has increased in FY17 with less growth in domestic coal demand than expected for the ongoing year. Alongside, thermal power plants has requested CIL to go slow on supplies to prevent further stockpile of inventory which leads to self-combustible and quality deterioration of coal.

Apparently, the coal stock position at power utilities is highest ever in the last four years. At present, power companies are placing small orders and focusing on clearing of the stock. On the other side, CIL is also not permitting its other subsidiaries to increase their production in a move to reduce the existing stockpiles.