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Coal India looks for buyers as it gets massive production

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For the first time since its inception on November 1, 1975, Coal India Ltd  is looking for buyers. “We were not ready for this,” says a CIL official, as the threat of major stockpiling at pitheads looms.

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In July, a senior CIL official went to Hyderabad to meet power generation utilities to explore ways to step up fuel supplies.

But there was little interest from the gencos.

And, just three weeks back, a major steelmaker asked CIL to stop fuel despatches immediately. With the steel market in doldrums, the company did not want coal piling up.

For CIL, which has often been criticised for not supplying adequate fuel, this is a new experience. No longer is the low stock of coal at power plants a hot media topic. Coal stocks at power plants had risen from 21 days to 25-26 days in August.

Maintaining a large fuel stock is a wasteful expenditure for power plants, as the tariff regulator does not compensate the finance cost of the inventory. Naturally, they are resisting taking fresh deliveries.

In April-August, CIL managed an 8.3 per cent growth in sales by pushing power plants. But no more. And, this when coal production is growing at 10-12 per cent a month.

As against a 10 per cent capacity addition, generation of thermal electricity increased 1.4 per cent during April-July this year compared to the same period last year.

CIL tried other avenues — steel and cement industries — to push sales. But with little success, as these industries are also facing the slowdown blues. In sharp contrast to last year, ferroalloys facilities in Odisha are not lifting coal. There have also been cases of industries avoiding taking delivery of the fuel even after paying for it.

Result: Mounting pithead stocks at CIL mines. For the first time in decades the miner added to the inventory in the first half of the fiscal. Normally, the stock grows in the busy season of October-March.
Worried, the company is on a marketing overdrive. Top officials in the department are out locating buyers.

Mining subsidiaries have been asked to ensure zero complaints on coal size and impurities. Many arms are lagging in procuring surface miners that resolve these issues. Pressure is mounting on them to fall in line.

Beginning this month, the CIL Chairman will hold weekly video-conferences with CMDs of the subsidiaries to take stock of quality issues.

The mining companies will hold buyers’ meets every month.

“We always had a ‘sales’ department under the garb of ‘marketing’, where buyers were queuing up for supplies. This culture must change now,” said a CIL source.

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