15th Coaltrans India 2016 held in Goa from 2nd March to 4th March, 2016 was well attended by who's who of the Coal industry. Mr. Sushil Maroo, CEO & Managing Director, Essar Power Ltd, presented his views on the power generation in India, the challenges faced by Coal India to meet its billion tonne target, and other relevant issues pertaining to the coal industry.
On the issue of power generation Mr. Maroo said, “Power generation has grown rapidly over the years. Coal demand has surged over last five years due to huge capacity additions in the country. Coal based Power Generation capacity will increase by a CAGR of 4.9% to 230GW in 2022. There is a thrust on domestic production of coal. The government plans to increase Coal India’s production from 500 million tonnes to one billion tonnes. Coal India achieved an impressive rise in thermal coal production in FY2015-2016. Production for the first ten months was up by 9%.”
Mr. Maroo spoke about the hurdles on the way to meeting the target of one billion tonnes.
“Development of railway corridors/faster implementation of rail lines to evacuate coal from mines is the need of the hour. Limited washing facilities for improving coal quality, limited capacity in rolling stock, complex land acquisition and R&R issues, local and legal issues further complicate the matter. Obviously there are a lot of issues. But the issues are getting resolved.”
Commenting on the international coal markets and imports in India Mr. Maroo said, “India has emerged as the largest importer in 2015 and may continue to be the largest importer for few more years. Government aims to cease imports within the next two years. Indian Coastal power plants will continue to import for some more time as long as coal prices and freight remain low. Another reason why coal prices will fall further is because coal has now become dirty commodity and the emphasis is being given to solar energy. World over a lot of attention has been given to the generation of solar energy and so is the case in India.
Global Seaborne thermal Coal imports have been hovering around 850~900MMT which includes Atlantic imports of~200MMT and Pacific imports of 650~700MMT. Demand from Europe will continue to fall owing to retiring coal fired power plants getting replaced by renewable. Low demand of coal for power generation due to availability of cheaper and clean Gas (Shell and LNG) is bound to happen.
FOB prices of coal have been dropped by 25 ~ 35% during last two years. International coal prices have not yet come down in tandem with change in Crude oil prices. Due to low Freight rates, Colombian and Russians coals are competitive. Average T/C rates (4 routes) for cape vessels have come down by 94% (from 2010 till 2016).
As low tariff is imperative for industrial growth to fuel ‘Make in India,’ Mr. Maroo feels that there is a necessity to lower power tariff for end consumer. This is possible only by low fuel costs, low financing costs, reduction of cost of distribution, and rapid dispute resolution. He concluded his session by saying “The import of coal is bound to go away in the next few years.”
Source: Ms. Shyamala , Capt. Virendra N Mishra
TSTNewsdesk (The Shipping Tribune)