In a reversal of trend, NTPC Limited will not import any coal this fiscal. The premier power producer in India will source its entire coal requirement of 155 mnt for the fiscal domestically, from Coal India Limited (CIL), to run its coal-based power plants. NTPC is the largest power company in India that accounts for around 25% of the total power generation in the country.
NTPC has a cumulative installed capacity of 47,178 MW. It has 44 power plants in total, out of which, 18 are coal-based stations, 7 are combined cycle gas/liquid fuel- based stations, 1 hydro-based station, 9 joint-venture stations (8 coal-based and 1 gas-based) and 9 renewable energy projects. Out of the total installed capacity, 35085 MW accounts for coal-based generation.
NTPC’s decision to entirely depend on domestic coal seems to surprise many, as power producers in the preceding fiscals struggled to source domestic coal due to insufficiency in coal production. They had to resort to import to meet their power generation requirements. But, with the dramatic transformation in the coal production scenario in the country, power producers now have the option of sourcing coal from within the country without having to depend on overseas markets.
As a consequence of the efforts of Government of India (GoI), coal production in the country has increased remarkably, leading to a situation in which supply has outstripped demand, even prompting CIL to look for export markets to dispose-off the excess inventory.
As a matter of fact, higher production in FY16 led CIL enter into FY17 with a stock of around 57.67 mnt. Keeping its active production schedule intact, the largest miner in the country set a production target of 598.6 mnt for FY17. Even during the first quarter of the current fiscal, CIL produced 125.65 mnt of coal, but the entire volume was not sold, leaving surplus.
NTPC, in fact, had lowered coal imports in FY16 in view of the increasing domestic availability. In FY16, the state-run power major, had imported 9.47 mnt of coal, 42.2% lower than 16.38 mnt imported in FY15.
Eventually, NTPC decided to stop importing coal this fiscal due to adequate domestic availability. Also coal mining is to begin at its Pakri Barwadih mine in Jharkhand.
In FY15, the power major had faced severe coal resource crunch due to inadequate domestic supply. Coal requirement for NTPC in FY15 was 177 mnt. Out of the total quantity, 147 mnt was sourced domestically through coal supply agreements, and 3 mnt through bilateral Memorandum of Understanding (MoU)/e-auction. To meet the requirement, balance of 16.38 mnt was imported.
In addition to domestic availability, NTPC also has exclusive coal blocks allocated to it by the Government of India that assures the power major of constant coal supplies. In FY15,
NTPC was re-allocated 5 coal blocks, which were earlier cancelled by the Supreme Court of India. These 5 coal blocks were Chatti-Bariatu and Chatti-Bariatu (South) in Jharkhand; Kerandari in Jharkhand; Dulanga in Odisha and Talaipalli in Chhattisgarh. It was also offered the Mahanadi B coal block in Odisha in that fiscal.
Reduction of Imports Improves Efficiency
The reduction in coal imports along with rationalization of coal linkages has resulted in improved economic efficiency for NTPC, which has already achieved a saving of 30 paise per unit, which translates into INR 5,500 million/month.
Moreover, the power major has also implemented a slew of efficiency measures, like reduction in grade slippage and lowering coal consumed per unit, which in effect lowered coal consumption in the first quarter of FY17 by 2.9% against the same period of the preceding fiscal.
NTPC has also achieved a 10% increase in its power generation in the first quarter of the current fiscal vis-a- vis the same period in the last fiscal. During the Apr June’16 period, NTPC generated 64.6 billion units against 58.7 billion units generated in the Apr- June’15 period.
Source: Steel 360 Magazine (Aug’16 Issue)
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