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Informist, Tuesday, May 20, 2025

 

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--Coal India officials: Co postpones production target of 1 bln tn again
--Officials: Coal India now hopes to achieve 1 bln tn output by FY29 vs FY27
--Coal India officials: Output target deferred on low demand, mining problems
--Coal India officials: See share of coal-based power declining in coming yrs
--Coal India officials: Rising production of green energy hurting coal demand
 

 

By Avishek Rakshit

 

KOLKATA - Coal India Ltd. has deferred its target of producing 1 billion tonnes of coal for the seventh time in a little over a decade due to poor demand and challenges related to land acquisition which would affect production, company officials told Informist. Coal India now hopes to achieve this target in 2028-29 (Apr-Mar), against its earlier target of FY27.

 

This target was first set in October 2014 by Piyush Goyal, who was then the coal minister. Goyal set FY19 as the deadline for Coal India to achieve this ambitious goal. However, Coal India soon revised the deadline to FY20 and revised it in FY18 again to FY26 citing production bottlenecks. In FY20, expecting a surge in demand for coal and because of debottlenecking of mines, it brought the target ahead to FY24. In FY23, Coal India deferred the target yet again to FY26.

 

The company achieved an output of 781 million tonnes in FY25 and hopes to raise it by 12% in FY26 to 875 million tonnes. "We are now targeting an output of 915 million tonnes in FY27 and 956 million tonnes in FY28. The production target of 1 billion tonnes does not seem feasible before FY29," a company official said. "Where is the coal demand? And on top it, there are too many issues with land acquisition, particularly in Chhattisgarh and Jharkhand."

 

According to the official, although the world's largest coal miner is acquiring land on paper, the actual delivery of the land to Coal India to set up mining operations is taking longer than usual. "On one hand land documents are not proper, so we have to first sort that out, then the state government which acquires the land takes time to deliver it to us, and then there are issues in taking possession of the land. Then there are regulatory clearances. In a nutshell, there are too many issues," the official said.

 

The issue with land acquisition is mostly faced by two of its subsidiaries – South Eastern Coalfields Ltd. and Central Coalfields Ltd. The former is the second-largest coal producing subsidiary and the latter the fourth-largest subsidiary. These two subsidiaries together account for 33% of the coal produced annually by Coal India.

 

All the subsidiaries of the coal major face problems with land acquisition but it is markedly so with these two companies and the scale of land acquisition issues are on the rise as the Maharatna company is increasing operations, company officials said.

 

Apart from land acquisition problems and delays, heavy rainfall is also affecting the company's production. For instance, in FY25, production of South Eastern Coalfields fell by 10.6% to 167.5 million tonnes and production of Central Coalfields increased moderately by 1.7% to 87.5 million tonnes. These two subsidiaries are even more important as Coal India's future plans to scale up production and sales primarily involve these two subsidiaries, apart from Mahanadi Coalfields Ltd. – the largest subsidiary.

 

"On top of it, Coal India has been facing delays in environmental and forest land clearances, which is upsetting production plans," a company official said, adding that land acquisition problems are also delaying commissioning of its first-mile connectivity projects to evacuate coal faster to the power plants.

 

For instance, Coal India got a total of 31 environmental clearances in FY25 which added nearly 38 million tonnes of additional production capacity. In FY24, the company had received a total of 27 such environmental clearances which added nearly 65 million tonnes of output capacity.

 

The officials said coal demand conditions continued to remain tepid even during the summers when power consumption picks up, leading to a surge in coal demand. In April, which marks the beginning of the summer season, sales volume declined 1.2% on year to 63.4 million tonnes. However, production increased marginally by 0.5% on year to 62.1 million tonne.

 

"If we continue to produce more, where do we keep the coal if the demand is not there," company officials wondered. Currently, thermal power plants in the country have a total coal stock of 57.5 million tonnes which can generate power for around 20 days even if not refilled by coal producers.

 

According to data from the Central Electricity Authority of India, electricity generation in April declined by nearly 2% on year and by 1.8% on-month to 133.66 billion kilowatt hour. Thermal power generation fell 3.7% on year to 119.1 billion kilowatt hour, but nuclear power generation increased by 8.6% on year to 4.8 billion kilowatt hour and hydropower generation increased by over 18 on year to 9.6 billion kilowatt hour.

 

According to Coal India's internal projections, the share of demand for power from coal-based power plants is expected to decline to 61.8% in FY27, from the current financial year's projection of 63.5%. In FY28, the share of demand of thermal energy in the country's total energy demand is expected to decline further to 59.6%.

 

"Renewable energy is picking up pace rapidly and even we are investing heavily in solar energy and other clean coal projects. Although India will continue to rely heavily on coal, its share in electricity generation will decrease. So, we will have to produce coal in accordance to market conditions and not rush it without any rationale," a company official said.

 

For the ongoing financial year, Coal India has set a production target of 875 million tonnes and a sales volume target of over 900 million tonnes. On the National Stock Exchange, shares of Coal India Tuesday closed at INR 408.10, up 1.3% from the previous day.  End

 

Edited by Ashish Shirke

 

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