A historic drop in power demand that has taken a toll on electricity generation has led to a 17 per cent drop in India’s thermal coal imports in the first nine months of the current financial year (2019-20).
Annually, the country imports 235.24 million tonne coal worth Rs 170,880 crore.
Coal shipments at the country’s 12 major ports dropped to 65,971 million tonne during the April-December 2019 period from 79,558 million tonne in the corresponding period of 2018, according to data sourced from Indian Ports Association.
Experts attribute the overall decline in both coal imports and domestic production to the decline in thermal power generation witnessed in the current financial year given the subdued electricity demand.
“The slackness in electricity demand during the current financial year is due to both seasonal factors like extended monsoon and moderation in demand from the industrial segment. It is also reflected in the dip in energy demand from few industrialised states in last 2-3 months,” Sabyasachi Majumdar, Senior Vice President at ICRA told ETEnergyworld.
The country produced 480 million tonne coal between April 2019 and December 2019, a 3.7 per cent drop over 498.51 million tonne production in the same period of 2018, according to coal ministry data. This year’s production was also 40 per cent less than the target of 810 million tonne for this period.
The drop in local output is attributed to land and clearance related challenges, mainly in Odisha and Chhattisgarh, coupled with extreme rainfall. “Although there is a slowdown, even at FY18 demand levels, coal production in India trails demand significantly,” said Niladri Bhattacharjee, Partner, Metals and Mining, KPMG India.
He also said that if the fall in power demand sustains for long, the current demand-supply gap will narrow and become a cause of concern for the coal sector.
According to another analyst, Anish De, National Head of Energy & Natural Resources at KPMG India, the main reason for the fall was the extended monsoon which affected coal production till October and November of 2019. “Also, the fall in power demand post July is affecting coal demand, both domestic and imported. On the whole, this year has seen flat demand as compared to the previous year," he told ETEnergyworld over an email conversation.
Production at Coal India Ltd, the state-owned monopoly miner of the fuel, also dropped by 6 per cent to 388.41 million tonne in the first nine months. "Apart from muted demand due to GDP growth slowdown, inability of Coal India to ramp up supplies have also been a factor behind the negative domestic coal production in the current fiscal. Additionally, good rainfall and consequent hydro power generation too has been a factor," said Jayanta Roy, Senior Vice President and Group Head of Corporate Sector Ratings at ICRA.
Apart from production, overall coal dispatch or offtake also dropped 5 per cent to 508.62 million tonne during the April-December 2019 period.
