Friday, 17 May, 2024
By: Yash Gupte
With a surge of 13.21 percent, Coal India Limited's (CIL) production increased to 52.27 MT in August 2023 from 46.17 MT in August 2022. Image Source: IANS
The Cumulative Coal Production (up to August 2023) has increased significantly in FY23-24, from 316.27 MT during the same period in FY22-23 to 349.01 MT, an increase of 10.35 percent.
The Ministry of Coal reported a significant increase in overall coal production in August 2023, reaching 67.65 Million Tonnes (MT), exceeding the 59.95 MT of the same month the previous year, with an increase of 12.85 percent. With a surge of 13.21 percent, Coal India Limited's (CIL) production increased to 52.27 MT in August 2023 from 46.17 MT in August 2022. The Cumulative Coal Production (up to August 2023) has increased significantly in FY' 23-24, from 316.27 MT during the same period in FY' 22-23 to 349.01 MT (Provisional), an increase of 10.35 percent.
Source: Ministry of Coal
With a growth of 8.40 percent in Q1 of FY 2023–24, the Ministry of Coal has significantly increased nationwide coal production. When compared to Q1 of FY 2022–23, when the overall coal production was 205.65 million tons (MT), it has significantly increased to 222.93 MT. Production at Coal India Limited (CIL) increased by an amazing 9.85 percent in FY 2023–2024, from 159.63 MT in the same time the previous year to 175.35 MT. In FY 23–24, captive mines/others saw an increase of 4.74 percent, reaching 30.48 MT, up from 29.10 MT in FY 22–23 over the same period. These successes have contributed to the industry's general upward trend.
While there was a 16.76 percent increase in coal imports from April to May 2023 compared to the same time last year, it is vital to keep in mind that this increase is mostly due to the sharp drop in coal import prices. In the first quarter of FY 2023–24 compared to the first quarter of FY 2022–23, coal import prices have fallen by more than 60 percent.
Source: Ministry of Coal
The Ministry of Coal has set a target of producing 1 billion ton of coal in FY2023-24, a 13 percent growth year-on-year. Recently, India added another feather to its cap as the FY 2022-23 recorded the highest ever domestic production of coal. Prime Minister Narendra Modi in a tweet, expressed his happiness over the highest ever coal production in the history of India. The PM tweeted, “Outstanding accomplishment in an important sector for economic growth.” The government is emphasizing on increasing domestic coal output and reducing non-essential coal imports into the nation. Production of coal grew by 8.67 percent in 2021–2022 compared to the previous year. During the current year till February, 2023, domestic coal production has increased by over 15 percent compared to the same period of last year. In 2023–2024, it is estimated that domestic coal production will reach more than 1BT.
Looking at the coal production in Q1 of FY2023-24, it can be said that the government can successfully achieve the target of producing 1 billion ton of coal in the financial year, around 13 percent growth year-on-year.
In comparison to 716.08 MT in 2020–21, the nation as a whole produced 778.19 MT of coal in 2021–22. Around 28 of the top 37 coal mines produced more than 100 percent of their total output in January 2023, and three other mines produced between 80 and 100 percent. The coal production in FY 2022-23 increased by 14.65 percent to 892.21 MT as compared to 778.21 MT in 2021-22.
According to a report published by CareEdge Ratings, India’s coal production is anticipated to increase in financial year 2023-24, driven by a ramp-up in production of state-owned Coal India Ltd (CIL) and NLC India Limited by engaging mining developers cum operators (MDOs). Additional output is anticipated from both the current captive mines and the new ones.
Source: Ministry of Coal
It is evident from the above chart that there has been an increase in the domestic production of the coal and decrease in the import of coal in the country. The FY 2022-23 recorded the highest ever domestic production of coal at 892.21 MT and also recorded the lowest import of coal at 186.05 MT. India recorded highest ever import of coal in the year 2019-20. About 248.53 MT of coal worth Rs 15,27,320 million was imported in 2019-20.
The government has taken several steps in order to reduce imports and maintain a constant supply of coal in the country. Some of the steps are- Regular reviews by Ministry of Coal to expedite the development of coal blocks, Single Window Clearance portal for the coal sector to speed up the operationalization of coal mines, Project Monitoring Unit for handholding of coal block allottees for obtaining various approvals / clearances for early operationalization of coal mines. Apart from this the Ministry of Coal has requested the Ministry of Environment, Forest and Climate Change (MoEF&CC) to allow coal mines with existing Environmental Clearances to increase their production up to 40 percent, to hike by up to 50 percent without Fresh Environmental Impact Assessment or Public Consultation. Talking about the import of coal, according to the current import policy, consumers themselves may freely import coal (under Open General Licence) based on their own needs and commercial discretion.
For ease of doing business, the Ministry of Coal has established a Single Window Clearance System (SWCS) portal. The Ministry’s unique project, SWCS, aims to develop a platform for obtaining multiple clearances for early operationalization of coal mines, which would ultimately lead to an increase in the nation's coal production through a single entry point. In order to provide a boost to the mining sector, 100 percent Foreign Direct Investment has also been allowed for commercial mining.
At the launch of 7th round of commercial coal mines auction and signing of agreements with successful bidders of the 6th round of auctions, Defence Minister Rajnath Singh urged the coal sector of the country to further ensure energy security of India to meet the requirements of our fast growing economy. He marked that contribution of coal sector is crucial to India’s economic growth.
NITI Aayog in a draft report estimated that India’s coal demand will increase to 1.1-1.3 billion tons by 2030. Coal India is expected to produce one billion tons by 2025-26. Exploring and utilising the alternate sources of electricity generation is extremely important for the country as India faced massive power outages and crisis in the previous year.
With 737.9 million tons of total dispatches in FY23, a 9.1 percent year-over-year growth, the domestic coal consumption by the power sector is still strong. Dispatches to the electricity industry are expected to keep increasing, according to CareEdge Research, due to rising demand from coal-based power plants. Tanvi Shah, director of CareEdge Advisory & Research, observed that although imports have increased compared to previous year due to greater blending requirements, government measures to increase domestic output will, in the medium to long term, reduce dependence on imported coal. Due to the increased demand, especially in China and India, coal prices are predicted to stay high relative to pre-pandemic averages.
Over 70 percent of India's power generation capacity comes from coal plants alone, demonstrating the nation's heavy reliance on fossil fuels. Solar energy makes up 14.3 percent of all renewable energy sources, followed by hydroelectricity (11.6 percent) and wind (10 percent). Less than 2 percent of India's power generation capacity is based on nuclear energy. By exploring and utilising the alternate sources of electricity generation, India must focus on minimising its coal imports.
