Coal India raises output on strong utility demand

State-controlled producer Coal India (CIL) raised its output and supplies last month and during the April 2022-March 2023 fiscal year in response to strong utility demand.

CIL — which meets more than 80pc of India's coal needs — produced 83.5mn t of coal in March, up by 4pc or 3.2mn t from a year earlier and up from 68.8mn t in February, according to provisional data from the company. Supplies to utilities and other coal consumers stood at 64.2mn t, up by 3.6pc or 2.2mn t from a year earlier and up from 58.3mn t in February.

CIL produced 703.2mn t in 2022-23, up from 622.6mn t a year earlier. CIL surpassed a government-set target of 700mn t, meeting the production goal for the first time in more than 15 years. Supplies during 2022-23 rose to 694.7mn t from 661.9mn t a year earlier, the data show.

The steady increase in domestic output comes as the government has been making efforts to increase local coal availability and raise power generation, especially ahead of the summer season when electricity consumption typically surges. India's nationwide coal-fired power generation, which accounts for the bulk of its overall electricity generation, continued to grow in March. Coal burn rose to 99.84TWh during 1-30 March, up from 99.51TWh during the same period in 2022, according to latest data from the Central Electricity Authority (CEA). It was also up from 94.43TWh in February.

India is taking steps to boost rail connectivity infrastructure for major coal mines to ensure faster evacuation, which would in turn help raise domestic output. But authorities project a 21mn t shortfall in domestic coal supplies over April-June because of logistical constraints, which could potentially affect stock replenishment by utilities.

Coal inventories at Indian power plants were at 35.4mn t as of 26 January, equivalent to just under 13 days of consumption, according to the latest CEA data. It was up from 33.66mn t as of 28 February. The power ministry has asked pithead power plants to maintain 12-17 days of coal stocks, while non-pithead utilities are mandated to have 20-26 days of inventories.

Delhi has already invoked emergency rules under federal electricity law, ordering utilities using imported coal to boost electricity generation to meet an anticipated increase in summer power demand. India's power ministry aims to buy 1.5GW of coal-fired electricity from imported-coal fired utilities to meet an anticipated deficit during the peak summer demand period. It has also ordered utilities to import 6pc of their thermal coal requirements for blending until September.

By Saurabh Chaturvedi