The country's largest miner supplied over 465 MT of coal during 2012-13 leaving a gap of over 50 MT between demand and supply. Coal India Ltd Chairman S Narsing Rao, in an interaction with Pradeep Pandey, says that in spite of best efforts, the domestic demand will only increase faster than the supply.
The demand-supply gap in coal is widening in the country. What should be the right strategy to deal with this?
In simple terms, increase domestic coal production to much higher levels. Having said that, I wish there were a plain vanilla solution to this unfortunately, there isn't. In spite of the best efforts, the domestic production would not be able to satiate the hunger of the increasing demand and the gap would grow with the passage of time. We are seriously pursuing various options to increase our production.
There are many projects where there is huge production potential, such as North Karanpura (CCL), Mand-Raigarh (SECL) and Vasundhara (MCL) coalfields. However, they have no railway infrastructure for coal evacuation. Ideally, CIL is in a position to perk up its production by almost 300 MT if rail connectivity is created at these three points. We are seriously pursuing this issue and if resolved speedily the demand-supply gap to a large extent can be narrowed down.
How else has CIL planned to increase its production capacity?
Our major challenge is to meet the rising demand from the power sector. While steel is another important sector, it basically uses metallurgical coal, i.e., coking coal, reserves of which, unfortunately, are limited in our country. Capacity expansion in power sector and the resultant demand on coal is far outstripping the rate of indigenous production.
There is no single solution for ramping up the production. It is a concerted effort on many fronts. We are closely monitoring the coal production at various levels and are increasing operational efficiency. We are employing various methods such as large-scale contract mining, speeding up land acquisition, improving infrastructure at coalfields, modernising the mines etc, so that production goes up, and the country's dependence on imports is minimal.
CIL's 2012-13 results were quite robust, what were the major factors that helped the company to book strong growth?
The main reason for our profitability in 2012-13 was volume growth. The incremental coal off-take has been very high during 2012-13, that is, 32.10 MT, the highest ever in a single year so far. Setting a new high in coal off-take growth, CIL supplied 465.18 MTs of coal to its consumers during 2012-13 against 433.08 MTs in 2011-12 registering a growth of 7.4 per cent. Secondly, there was an impact to the tune of around Rs 1,700 crore, on annualized basis, during 2011-12 on employee wage increase which was not there in 2012-13. Further, the cash cost has increased only by 8.84 per cent during 2012-13 on a year-on-year comparison, which is well below 10 per cent mark taken for industries like CIL.
How much will your overseas subsidiaries share this supply?
Though the company is prospecting for acquisitions overseas to shore up the country's energy requirements, it is too early for supplies to materialise. In fact CIL has acquired prospecting licences in Mozambique under a wholly owned subsidiary 'Coal India Africana Limitada' and the first phase of drilling for 10,000 m has been completed. We still have a long way to go before the mining commences and the coal imported to India.
What kind of investment plan do you have for the next five years?
Capital outlay for the entire the 12th Plan Period (2012-13 to 2016-17) is pegged at Rs 25,400 crore. We also hope to invest Rs 7,500 crores during the plan period on rail infrastructure.
The fundamentals of the company are very strong and being cash rich we are self sufficient to meet our capital expenditure needs from our internal resources.
What is the status on coal washeries development plan?
A total of 18 washeries with a total through put capacity of 98.1 Million Tonnes per annum (MTPA) are in pipeline on Build-Own-Operate and Turn-Key basis. Of these 18, presently 10 washeries are being pursued vigorously. 6 belong to Bharat Coking Coal Limited and 4 washeries are located under Mahanadi Coalfields Limited. Madhuband and Patherdih washeries each of 5 MTPA capacity under BCCL are expected to come up by 2014-15. Site work had already begun for these washeries. Remaining others are in various stages of evaluation and pre agreement signing stage.
How do you see the future prospects in energy sector amid fuel supply constraints?
For a growing economy like India, industrial growth is inextricably linked with energy sector, which plays a decisive role for years to come. In India coal is almost synonymous with the energy sector. Currently, coal is the most dominant energy source in the country meeting around 52 per cent of the country's total primary commercial energy requirements, while 72 per cent of the entire power generated in the country is coal based. Indian is endowed with abundant coal reserves. Of the 295 billion tonne of reserves, around 110 billion tonne are in proved category. So because of its dependability, availability and affordability coal continues it dominant position in the foreseeable future too, say, at least till 2030.
Recently, the government has decided to have a coal regulator. How helpful will it be to the energy sector?
It is a government decision and will of the parliament and I have no comments to make on the issue at this juncture.
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