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  • The coal industry is witnessing a remarkable transformation and recent developments point to a structural shift in the future.

  • From chronic shortages, the coal industry has seen a steady growth in supply. In pursuit of its 1 billion tonne target by 2020, the country's largest coal company, Coal India Limited (CIL), has witnessed a sharp increase in production in recent years, rising from 536 million tonnes (mt) in 2015-16 to 554 mt in 2016-17 and ending last fiscal with an output of 567 mt. With this, the country's overall coal production (including from other public and private miners) has shown a year-on-year increase of 3 per cent to reach 676.5 mt in 2017-18. Coal imports have seen a corresponding decline, from 203.95 mt in 2015-16 to 190.95 mt in 2016-17, a decline of 6.4 per cent.

  • The improvement in domestic coal supply along with reforms in coal distribution and marketing has added new supply options for end-customers. The new coal linkage bidding mechanism, SHAKTI (Scheme for Harnessing Koyla Transparently in India), has drawn a positive response from the industry, which had been adversely affected due to the lack of FSAs.

  • Meanwhile, the introduction of a special forward e-auction window for power consumers and exclusive e-auctions for non-power customers have aided in improving coal availability in recent years. Further, the recently approved methodology to allow flexibility in the utilisation of domestic coal by private producers is expected to reduce the landed cost of coal.

  • The introduction of captive coal block auctions has been another decisive development for the coal industry in the recent past. Since December 2014, five rounds of auctions have been announced with 30-odd blocks (of the 204 cancelled blocks) auctioned so far.

  • More recently, in one of the biggest reform moves since the nationalisation of the coal sector, the government has allowed commercial mining of coal by private players. The move is expected to further improve domestic output, benefit generators through more certainty in supplies, etc., provided that the quality and quantum of the blocks on offer are attractive. This would also bring in best-in-class technologies by global coal miners as well as increased mechanisation and automation as potential mine owners aim for higher efficiency to win bids.

  • A new pricing policy is also proposed to be introduced this fiscal year to move to the global standard of charging customers based on the actual gross calorific value (GCV) of the dry fuel. The move is expected to resolve the long-standing differences over coal quality and grade slippage between CIL and power plant developers. This would also complement the efforts being made by public players to set up coal washeries to address quality concerns.

  • Meanwhile, transportation and evacuation infrastructure-related challenges continue to be high on the government's agenda given that a number of power stations have been reporting critical coal stocks recently due to logistical constraints. Also, for steel and imported power generation plants, the dependence on coking and non-coking coal imports is significant. The government is trying to address the issue by expediting work on critical coal connectivity rail lines, increasing rake availability, strengthening port infrastructure, etc.

  • Amidst these developments, the key questions being evaluated are the future demand for coal against the backdrop of subdued growth in thermal power generation in recent years as well as predictions of a slowdown in thermal capacity addition and India's climate commitments that call for a greater thrust on renewables. Also, whether the market conditions can be conducive for new entrants given legacy issues such as delays in clearances and land acquisition challenges are some of the key issues that will need to be examined. More so, as the incumbent owners are struggling to operationalise their assets, besides facing uncertainty in cost recovery after aggressively bidding for the blocks auctioned.

  • The mission of this conference is to discuss the future of coal in India in light of the recent and expected developments in the sector, as well as examine the impact of these on industry stakeholders. The conference will examine key policy developments, discuss plans and strategies of coal producers, assess the future coal requirements of end-users, and analyse potential investment opportunities in mining. The conference will feature the viewpoints of all stakeholders and provide a platform to showcase the best practices and most promising technologies.
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