Coal India offers 70 mt pithead stocks to power producers

PRATIM RANJAN BOSE, THE HINDU BUSINESS LINE
KOLKATA, JULY 5:
Coal India Ltd wants to liquidate 70 million tonnes of pithead stock, beginning this quarter.

At least three private producers — Sterlite Industries, Adani Power, and China Light and Power (CLP) — have responded to a recent CIL offer to all 89 power stations in the country to lift coal on ‘as is where is’ basis.

Sources suggest that CIL is expecting more offers from the private sector that had been blaming the coal major for inadequate supplies.

The pithead coal is over and above the committed supplies under the fuel supply agreements (FSA).

TRANSPORTATION

‘As is where is’ means the consumers will be responsible for arranging the movement of the coal.

The initiative should boost CIL’s bottomline beginning the second quarter; profits have taken a hit of Rs 6,000 crore annually (Rs 1,500 quarterly impact) due to rise in wage cost and other employee-related expenses.

A CIL source said: “Power sector was complaining of a demand-supply gap. We are now offering 70 million tonnes over and above FSA commitments. We cannot reach it to their doorstep, due to non-availability of logistics solutions. If power producers fail to respond, we may offer this coal to other sectors.”

By the offer, power plants are free to lift as much as possible.

However, if the purchases are over 100 per cent of supplies already committed by CIL, consumers have to pay 40 per cent incentive as per FSA guidelines.

While PSUs are yet to respond to the proposal, Vedanta Group-run Jharsuguda Power Plant is keen to lift coal from the CIL mines in Odisha beginning this quarter.

Currently operating two units of 600 MW each, the plant is to add 1,200 mw by end of this year.

CLP-operated Jajjar Power Limited, which has entered FSA for its supercritical 1,320 MW project at Haryana, and the Adani group operated 4620 MW Mundra thermal power plant are also keen.

With availability being the focus area, CIL has voluntarily increased its offtake target for the July-September quarter by over 12 per cent from the initially projected 35 mt a month to 40 mt a month.

Q2 TARGETS UP

Compared to 2011-12, CIL is aiming to improve availability by nearly 8 mt a month or 25 per cent. The company improved off-take by nearly 7 mt in the first quarter with loading ratios improving 11 per cent. As in July, the company is now loading 180 rakes a day, 10 per cent more than same time last year.