Coal production rebounds on winter power demand

New Delhi: Monthly coal production recovered from a contraction and grew for the first time in three months in November, indicating robust power demand during winter.

Data from state-owned monopoly Coal India Ltd (CIL) said monthly production grew 5.3% to 50 million tonnes in November from a year ago, after a bearish trend in mining since August when output had shrunk by 10%.

Coal India had been trying to increase demand for the fuel in the last few months as the steps taken over the last two years to improve the critically low supply situation at power plants had led to a surge in supply, while power generation requirement did not keep pace with it.

With winter setting in, the increased power requirement helped boost coal demand. Coal offtake, which had also recorded three successive months of contraction since August, rebounded 6.2% to 48.1 million tonnes in November.

An official from coal ministry, who asked not to be named, said production cyclically goes up in winters due to higher power demand.

According to data from the Central Electricity Authority (CEA), power generation rose 8.5% in November to 93,234 gigawatt hour from a year ago. In October, power generation had grown by just 1%.

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According to Rudranil Roysharma, senior consultant at Feedback Business Consulting Services Pvt. Ltd, reforms in the coal supply logistics showed result quickly while the steps taken to improve the health of state power distribution companies may take a little longer to fructify. This, he said, resulted in a mismatch between coal supply and demand in the recent past.

Earlier this year, the government revamped coal logistics to enable plants to get fuel with the least amount of transportation required. Power distribution companies, the accumulated debt of which are being taken over by the respective states, are expected to turn around by the beginning of 2018-19 financial year.

Coal India has a target of producing 725 million tonne in the current financial year and one billion tonne by 2019-20, up from 539 million tonne last year. In the April-November period of this year it produced 324 million tonnes.