The Hindu : Business : CIL saddled with rising stocks

Online edition of India's National Newspaper
Tuesday, Feb 14, 2006

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CIL saddled with rising stocks

Indrani Dutta

Excess coal is now being pushed to other sectors, especially cement

KOLKATA: The public sector Coal India Ltd (CIL) finds itself saddled with rising coal stocks with at least five of its seven coal-producing subsidiaries carrying an inventory that might be the highest in a decade.

Confirming this development to The Hindu, CIL Chairman, Shashi Kumar, said stocks, now at 22.6 million tonnes (against 16.5 million tonnes in the same period last year) might exceed 26 million tonnes at the year-end.

The rising stocks, sources said, needed to be viewed in the backdrop of the power sector's persistent cry over coal shortage. The excess coal is now being pushed to other sectors, especially cement. However, CIL, the world's single largest coal company, is now having problems marketing coal at such a short notice.

"With a daily addition of about one lakh tonnes, coal companies are facing problems carrying out their normal production — the threat of the coal catching fire is also there," sources said. Companies facing a serious problem in this respect were: Eastern Coalfields, Mahanadi Coalfields, South Eastern Coalfields, Central Coalfields and to a lesser extent Bharat Coking Coal.

Admitting that the coal supply position was "very comfortable", a senior NTPC official told The Hindu from New Delhi that at present all NTPC plants had adequate stocks. It may be mentioned that the PSUs which account for nearly a quarter of the power output had planned for substantial imports of coal to tide over the projected shortage.

The source said NTPC's import plans for 2005-06 were on but they might need a review if CIL could meet its demand.

They said increased production of hydel power in the south was a reason for the drop in coal demand from the thermal power sector.

The power sector had wanted CIL to produce about 351 million tonnes in 2005-06 to meet its demand. CIL upped its internal targets accordingly, but said that it would be able to produce only about 343 million tonnes since it had constraints in achieving a quantum jump.

The 2005-06 target will be met but now there is the problem of finding takers.

Analysts, however, see this phenomenon of offtake trailing production as a classic case of lopsided planning.

They say that for years, a fear psychosis has been created about inadequate coal supplies, mostly by the coal mafia. They said a single percentage point rise in a power plant's plant load factor (PLF) created a demand for five million tonnes of coal and the nationalised coal sector had had problems in keeping pace with the power sector's increasing efficiency.

However, there was need to do the sectoral planning better, especially on imports now, since further PLF increases in the power sector would be difficult to achieve, with a level of 75 per cent having been touched already.

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