The Coal Consumers Association of India (CCAI) has filed a plea to the government to resume rake-based coal supplies via rail-mode to the non-power sector in a bid to maintain cost competitiveness and sustain operations.
Domestic miner Coal India Ltd (CIL) has delivered an exceptional performance in terms of coal production and dispatches this fiscal. However, supply to non-power sector (NPS) was lagging behind on the back of priortisation accorded for power sector amid elevated demand.
This situation has led NPS to rely on road-based supplies, in turn, leading to soaring costs for its constituent industries.
CCAI informed that the non-power customers are being compelled to lift coal via road mode of supply against their pending allotment via rail mode. This conversion generally involves payment of higher premium which is comparatively more than that for road-mode of supply.
CIL’s largest coal producing subsidiary Mahanadi Coalfields Ltd (MCL) had introduced provision for change in mode of supply from May 2022 which has been continued latest till October 2022.
Adding to the plight of these customers, coal volumes against e-auctions are sold at a higher price due to the prevailing disparity. In addition, higher transportation costs involved in road supplies are also adding to the cost burden.
It was also highlighted that lesser number of rakes were delivered to NPS than the allocated quantity against supplies under the linkage policy.
Need for higher supplies
CCAI has sought government’s intervention towards increasing the coal rakes meant for NPS, given that CIL has stepped-up its performance in the dry-season while peak demand from power sector has gradually eased with the onset of winters.
In addition, the association has also called for rail-to-road conversion without change in premium so that the consumers do not have to bear the additional expenditure.
As per data provided by the coal ministry, rakes supplied to NPS were below optimal levels in FY23. In November 2022, coal movement for NPS jumped to the highest of 15.6 rakes/day in this fiscal, signalling an improvement in the condition post-monsoon. However, it was still assessed lower compared to 24.1 rakes/day recorded in November 2021.
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