KOLKATA (miningweekly.com) – Despite thermal power plants across India reeling from shortages of dry fuel and the government readying to open up the coal sector to private miners, State-owned Coal India Limited (CIL) does not believe that there is a need for fresh allocation or auctions of coal blocks.

The country’s largest coal producer said in an internal report that the total capacity of all coal blocks operational and allocated through auction or preferential dispensation to government mining companies, including CIL, Singareni Collieries and Neyveli Lignite, would total an estimated 1.5-billion tons a year and that there was “limited need for fresh allocation of blocks given the base case scenario of demand for the fuel”.

CIL maintained that, should the base demand scenario change, existing operational mines would be able to increase production and that no new projects or blocks would have to be brought into production.

This is premised on CIL’s assessment that aggregate coal demand would be in the range of 900-million tons a year to 1-billion tons a year by 2020, and an indirect hint that private commercial coal miners would face challenges of demand for their production.

Significantly, this at a time when CIL’s own production has been missing government set targets and coal stocks at thermal power plants at critical levels.

During April 2017 to January 2018, the miner produced 440-million tons, against a Coal Ministry target of 469.90-million tons, a trend that indicates that the miner is poised to miss the production target of 600-million tons for the full 2017/18 financial year.

Total coal stocks available at thermal power plants have been showing only marginal improvements at 14.84-million tons by the middle of last week, up from 13.37-million tons in mid-January, according to government data.

The data show that thermal power plants’ stocks averaged at nine days consumption equivalent, up from five days last month, but still below 21 days stipulated by Central Electricity Authority.

An indication that availability of coal for thermal power plants was in for a long-term shortage, rather than sporadic slumps, was the Power Ministry’s reported move to alter its plant location policy to ensure supplies.

It has been reported that at a recent meeting between the Power Ministry and its counterparts in the Coal and Railways Ministries, it was decided that all future thermal power stations, with exception of brownfield expansion projects, would have to be located within 500 km of coal mines.

This, the Power Ministry hopes, will minimise fuel availability shortages stemming from transportation and logistical issues, as well as the build-up of stocks at pitheads, while actual offtake from miners remains low.