Coal India May Miss FY22 Offtake Target Even Amid Higher Supply To Power Sector
The world’s largest miner of coal is set to miss its offtake target for FY22 even as dispatches to power producers across India have increased.
Coal India Ltd.’s dispatches have increased from 75% of the total supplied to power plants to more than 83-85% over the last four-five months. It also ramped up supplies to thermal power plants after their stocks neared depletion, pushing the country to the brink of a blackout.
Coal India’s increased supplies, however, are unlikely to satisfy demand as the economy continues to recover, driving up power usage. Heavy rains in September, too, amplified the crunch, according to the Power Ministry, as production and dispatch from mines got impacted.
Even India’s largest electricity generator is tying up additional supplies. Adani Enterprises Ltd. recently won a contract to supply imported coal to the state-run NTPC Ltd.
And while imports of the solid fuel fell from levels seen in April 2021 as the energy crisis in India eased on increased supply from Coal India, NTPC’s move to secure overseas supplies sparked fears that power plants may once again lack inventory.
“In a no-lockdown summer, the generation stations will be hard-pressed for coal,” Rohit Natarajan, associate vice president of research at Antique Stock Broking, said. “To make matters worse, coal inventory in non-pithead plants is just 35% of normative levels.”
“And pan-India fuel inventory at thermal gencos (power generating companies) is just 40% of normative levels.”
That’s when Coal India’s cumulative dispatches to the power sector over the last nine months have been the highest in over two years, according to data available with the Ministry of Coal. The company’s sales have risen 23% year-on-year so far in the ongoing financial year.
Impact On Offtake Target
Yet, going by the dispatches so far, the company is expected to miss its FY22 offtake target of 740 million tonnes. The company reached 481 million tonnes in the first nine months ended December.
Antique Broking estimates full-year offtake at 660 million tonnes. That's a growth of 15%, the highest in at least five years. Still, it will be 11% below the the ministry’s target, the widest gap since FY20. And the fourth consecutive year Coal India will miss its target.
(Corrects an earlier version that misstated Coal India's nine-month offtake)