Coal India Losing To Captive Mines In Production Race

| Updated: May 21, 2022 5:49 pm

Over the last six years, Coal India Limited (CIL) production has witnessed a slower growth than the company-owned mines. In 2020-22, the coal production of captive mines leaped by 38.5%, while the CIL observed a tepid growth of 3.4%. 

The captive mines have also raced ahead in the power sector with a growth of 72%. According to government data, the increase in production in the power sector for CIL was 15%. The government predicted the CIL production to be around 565 million tonnes for the current fiscal year. These realities are far from Pralhad Joshi’s (Union Coal Minister) aim to achieve 1-billion-tonne coal production by FY-24. 

The thermal power stations across India are coal deficient. In recent times, the Union Ministry of Power has ordered the CIL and the private companies to import coal as the domestic supply might witness a shortage. Earlier, the projected demand for coal by the Ministry was 760 million tonnes.

CIL’s Status

CIL, the backbone of the coal supply in India, has given a colossal share of the coal supply. But, its production growth in the last years has taken a nosedive. Government projections indicate the difference in the future of CIL compared to captive mines. For captive mines, the jump would be 43%, but for CIL, the growth would only be 4.6%, which is surprisingly low. Private companies have started owning these captive mines in the past five years. 

We recall the Center’s 2015 decision to present 34 coal blocks for the first time in an auction held in three tranches. The Centre sold the coal blocks to leading companies for captive or personal use in power, iron, and steel. However, in September 2021, the Ministry of Coal warned the captive coal block owners about increasing production.

Even though the production of captive mines is more than CIL, they fail to meet the country’s power needs. According to senior power sector executives, the nation cannot rely on CIL for future coal supply. They’ve had long-term connections with CIL, but the company fails to provide them. There have also been conversations about pivoting dedications. 

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