CCAI Newsletter September

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Vol. XLVI No. 18 Published on : 28.09.2018 CCAI Monthly Newsletter September 2018

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From the Editor’s Desk Though Coal India has increased its production and coal supply situation has also improved at present but due to insatiable demand, inventory level at power plants has reduced. Number of thermal power plants with critical coal stocks have risen again. Non-power Sector is in very crucial situation due to non-supply through rakes for quite some time.

Domestic coal scarcity has compelled all the sectors to import coal and this has increased in the first four months of the current fiscal.

The government plans to auction power supply contracts with attached coal supplies, ease norms to allow coal usage for short-term power contracts and put in place a payment mechanism to help power projects recover dues in time from state electricity distribution companies to alleviate the sectoral stress to a large extent.

In the wake of shortage of fuel in thermal power plants due to inadequate transportation facilities, Coal India has been asked to expedite the signing of private siding agreement with Railways.

Coal India wants a policy on coal exports to neighbouring countries. But initial aim should be to meet the ongoing domestic demand for all the sectors. Ongoing mismatch in demand and supply situation is lying heavy on Power and Non-power Sectors both. Only a balanced supply mechanism would be able to avert crisis.

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Content Vol. XLVI No. 18 September 2018

06 |Consumers’ Page

Official Organ of the Coal Consumers’ Association of India. Disseminates News and Views on Coal and all other sources of Energy.

08|Power

4, India Exchange Place - 7th Floor Kolkata - 700 001 Landline : +91 33 22304488 / 22621516 E-mail : sec.ccai@gmail.com Website : www.ccai.co.in

14|Domestic

Editor : Subhasri Nandi

18|Global

Annual Subscription Rs. 400/(including postage) MO/DD to be made in favour of “Coal Consumers’ Association of India” CCAI do not necessarily share or support the views expressed in this Publication.

22 |In Parliament

28 |Monthly Summary of Domestic Coal 30 |Energy Generation Report 31 |Production and Offtake Performance of CIL and Subsidiary Companies

32 |Monthly Summary of Imported

Coal & Petcoke

34 |Overall Domestic Coal Scenario CCAI Monthly Newsletter September 2018

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CONSUMERS’ PAGE Present Coal Scenario Coal India has increased its production by 3.8% yoy for the month of September 2018 to 40.24mn tonnes. This brings the total production for the period of April-September 2018 to 256.47 mn tonnes, an increase of 10.6% compared to the same period last year.

Offtake also rose 0.8% yoy for September 2018 to reach 43.91 mn tonnes. Thus, offtake for April-September stood at 290.81 mn tonnes, an increase of 8.1% compared to the same period last year.

Consumers’ Concern 1. Coal Stock Position Though coal supply to power plants has increased at present but due to soaring demand, inventory level at power plants has reduced to 7 days. This is lower than the inventory levels at the end of August 2018 (10 days of inventory). Thermal power generators are likely to see a significant impact on margins due to the dual effects of both lower coal availability as well as higher coal prices.

Supply to Non-power Sector including CPPs by Rail is in crucial stage from most of the Subsidiaries.

Similarly, non-PPA holders have also requested for commencing Auction for them as per provisions of Shakti Scheme.

3. GCV slippage repeatedly found Power Consumers are repeatedly complaining of GCV slippage from different areas of ECL and BCCL. In spite of Third Party Sampling & Analysis, consumers are not satisfied with the quality specially from these two Subsidiary Coal Companies resulting in loss to the Power Plants.

2. Power Companies with and without PPAs have urged to start 4. High Level Empowered Committee (HLEC) for Non-power Auction under Shakti Scheme Power Plants without assured coal supply but with Sector PPAs could not take part in Auction due to various reasons, have urged to commence Auction to provide them the opportunity to win long term supply assurance.

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A High Level Empowered Committee involving Power, Coal, Railways and Finance Ministries has been formed by the Government to address the systematic issues causing stress in the Power Sector.

Non-power Sector consumers especially CPPs have requested for providing same relief to them also.

5. Time lag between sanction of coal quantity and loading of rake There is huge time lag between sanction of coal quantity and loading of rake and sometimes 6 to 8 months delay for actual loading of rake. This has resulted stuck up of huge advance payment with CIL Subsidiaries. Therefore, consumers have requested that advance payment may be insisted upon 7 days prior to expected placement of rake and quantity may be sanctioned based on additional bank guarantee to be provided by the consumers.

6. Request to expedite coal supply by rail from BCCL and MCL Companies both in the Power and Non-power Sectors are not getting adequate coal supply from Bharat Coking Coal Limited (BCCL) and Mahanadi Coalfields Limited (MCL) by rail mode. Due to this DOs are moving towards expiry with each passing day which eventually will lead to huge financial loss. Considering the situation, coal consumers have requested CIL to advise CCL, BCCL and MCL for providing relief in this regard.

7. Request for resuming normalcy in coal supply by rail from SECL,CCL & ECL Coal consumers are facing shortage of coal due to scanty supply by rail mode from Dipka, Gevra, Kusmunda, Korba and Korea Rewa region of South Eastern Coalfields Limited (SECL), RCM and KDH siding and Amrapali mine of Central Coalfields Limited (CCL) and Pandaveswar Dalurbandh siding of Eastern Coalfields Limited (ECL). Therefore, they have requested to establish a balanced supply mechanism otherwise abrupt demand would jeopardize the supply plan of the Subsidiaries.

Coal is not supplied from Baraoud and Jampali mines in last few months as certain grades are not available in Jampali and there is hardly any production in Baraoud mines and advance payment is deposited with SECL for two months or more. Therefore, consumers have requested for not accepting any advance payment till the offtake starts from these mines and to expedite the return of amount already been deposited by them.

9. Additional premium charged for conversion of rail to road mode CIL has come out with a scheme to convert linked quantity from rail to road mode on monthly basis due to huge time lag between sanction of quantity and actual rake loading. But Coal Companies are charging undue added premium when rail mode is converted to road mode. Consumers have requested Subsidiary Coal Companies to charge only the premium as per the FSA.

10. Request for your kind consideration on lifting of 25% of MSQ for rail linked Non-power consumers of MCL MCL had allocated 75% of MSQ through rail mode and 25% through road mode for Non-power rail linked consumers. Vide notification dated 22.08.2018, it had been again notified by MCL that if rail bound non-power consumers fail to lift the said 25% of MSQ through road mode, ‘the quantity thus short lifted’ shall be treated as deemed delivered.

Consumers, unwilling for Change of Mode should not be penalised by calculating the said 25% of MSQ as deemed delivered.

8. Request for not accepting any advance till offtake starts from Jampali and Baraoud Mines of SECL CCAI Monthly Newsletter September 2018

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POWER Government may auction power contracts with coal supplies The government plans to auction power supply contracts with attached coal supplies, ease norms to allow coal usage for short-term power contracts and put in place a payment mechanism to help power projects recover dues in time from state electricity distribution companies to alleviate the sectoral stress to a large extent.

The proposals are being deliberated at the high-level empowered committee headed by the cabinet secretary that is likely to meet next. “It has been proposed that the government removes restrictions on coal usage to include shortterm PPAs,” a person in familiar with the development said. “Auction of another 2,500 MW aggregated PPA scheme, this time with attached coal supply, has been proposed. Work has already begun on drafting a bill discounting mechanism to ensure recovery of timely timely payments from state power distribution companies directly to banks.”

A payment mechanism for private power companies will release Rs 15,000 crore dues owed to private power companies. The state-owned power generators have payment security mechanism with the Reserve Bank of India on its board. Private sector generators, on the other hand, face delay of up to six months in payments by discoms, adding to their

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stress and defaults on loan servicing.

Centre allows flexibility in power supplies to lower costs to consumers Consumers can soon expect some relief every time they pay their electricity bills. The Ministry of Power has allowed a power generation company (Genco) to supply cheaper power from any of its power plants to meet its commitments to a power distribution company (Discom).

This has been enabled under a scheme for flexibility in generation and scheduling of thermal power stations to reduce the cost of power to consumers. The scheme is in continuation of an earlier scheme that allowed Gencos to supply cheaper renewable energy instead of committed thermal power to Discoms.

According to the new scheme, “At present, the Discoms/States tie-up for supply of power from various power stations/generation companies. States generally requisition power from a station on day ahead basis considering its merit order among all the stations from which it has power tie-up.”

“However, on a national level, it is seen that many stations having low Energy Charge Rate (ECR) are not fully scheduled whereas the costlier stations are

scheduled at the same time. The needy beneficiaries are not able to schedule power from stations having lower ECR as they do not have power allocation/Power Purchase Agreement (PPA) in these stations. They have no option but to schedule the costlier power available in their basket,” the scheme notes.

According to the scheme document, the Gencos now will be allowed to supply cheaper power if available.

Higher demand pushes spot power price to eight-year high of Rs 14.08/unit Spot power prices touched over eight-year high of Rs 14.08 per unit in the day ahead market (DAM) on Indian Energy Exchange, mainly driven by higher demand. “Spot power price for supply touched over five year high of Rs 14.08 per unit in trading at Indian Energy Exchange (IEX),” a source said. The previous high was recorded at Rs 13.90 per unit in April 2010.

The spot power prices have touched a high of Rs 12.95 per unit for supply DAM on IEX due the similar reason. The demand was 298 MU while the supply was 192 MU. Earlier this year in May, the price of spot power price had touched about five-year high of Rs 11.41 per unit after starved captive power producers started buying power at exchanges.

The government had decided in May to augment coal supplies to centre/ state power plants and independent power producers (IPPs) from May 19 to June 30 to overcome shortage of the dry fuel and check power crisis. The decision was taken in a joint meeting of power, coal and railways ministries on May 17, 2018.

The source said the captive power producers are still grappling with the issue of coal supplies at their power plants. The captive power producers generate electricity for their own manufacturing facilities like steel, cement and others.

Power companies import 26% more coal in August Domestic coal scarcity has prompted power companies to import 26% more coal in August compared with the same month last year, even though their total coal consumption did not rise. Compared with July, imports were 11% higher while coal consumption by power generators was only 2% more.

Data from the Central Electricity Authority shows total coal consumption by the power sector in August was around 50 million tonnes — one million tonne more than in July this year and at the same level of August 2017.

Coal supplied jointly by Coal India and Singareni Collieries was 4.5% less in August compared to July.

These two public sector firms sent 10% less coal to power companies in comparison to allocation for the month. In July this year, they supplied 6% less than they were supposed to send. In August 2017, they sent 10% less coal than their monthly allocation for the power sector.

Captive production was around 1.5% less while procurement from e-auction was around 7.5% less in August this year compared to the previous month (July).

Total coal receipt from various sources declined 3% during the period.

Delhi, Uttar Pradesh, 3 other states may face power disruption due to coal supply issues Power supply to North India including Delhi and Uttar Pradesh, Bihar, Jharkhand and West Bengal is vulnerable to disruptions as fuel supply to 4,200 mw of generation capacity that feeds these states has fallen sharply heightening the risk of a shutdown from events like heavy rain.

Coal India’s supply has fallen because the mine supplying coal to NTPC’s large plants in the east has almost run out of pit head stock, while land acquisition problems have stymied expansion.

Coal India’s supply from Rajmahal mines in Jharkhand has fallen to 40,000 tonnes a day from about 55,000 tonnes. On a rainy day, the supply halves. At NTPC’s Farakka plant, stocks have plummeted to 4,000 tonnes from 2.5 lakh tonnes almost two months ago, said a senior NTPC official.

At the Kahalgaon plant, stocks tumbled to 45,000 tonnes from 5 lakh tonnes two months ago, forcing the company to scale down generation levels to 60% and 80% at Farakka and Kahalgaon power plants respectively from around 90% for both plants, the executive told. The issue has been escalated to the central government, which is monitoring the situation, executives said.

CCAI Monthly Newsletter September 2018

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Odisha wants swapping of NTPC power to save Rs 5 billion every year Burdened with steep tariffs on power from NTPC plants located outside Odisha, the state government has appealed to the Union Power Ministry to swap it with power sourced from the central power utility’s plants located inside the state. The power swapping could help the state save up to Rs 5 billion each year for the next 25 years.

Odisha has been making a feverish pitch to the Centre to de-allocate costly power from NTPC projects where power sourcing costs exceed Rs 5 per unit, pressuring the retail tariffs for consumers.

“Odisha has been allocated high-cost NTPC power from neighbouring states such as Barh-I (418 Mw) and Barh-II (166 Mw) which is likely to cost more than Rs 5 per unit, leading to high retail tariffs for consumers. We have been requesting Ministry of Power for surrender of this expensive power and its swapping with NTPC power from Kaniha and Talcher”, the state’s minister for energy Susanta Singh wrote to R K Singh, Union minister for power and new & renewable energy.

If Odisha’s plea for swapping of power is not entertained, the state would end up paying Rs 5 billion every year for 25 years.

Singh said, an enormous financial burden of Rs 120 billion on the power consumers could be averted if the Government of India agreed with the suggestions made by the state government.

CIL raises coal supply to NTPC’s Kahalgaon, Farakka power plants State-owned CIL said it has increased the coal supply to NTPC’s Kahalgaon and Farakka power plants as the units were operating at higher than the targeted level, resulting in additional consumption of fuel.

Both the plants, put together, have generated 9.795 billion units (BU) against the target of 9.191 billion units during April-July 2018. “Coal India Limited (CIL) is increasing its coal supplies…to the thermal power plants (Kahalgaon and Farakka) of NTPC,” it said in a statement.

Both Kahalgaon and Farakka power plants, it said,

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were operating at higher than the targeted level of generation during the current year, resulting in higher consumption of coal. “Though, CIL is already supplying more than the contracted quantity of coal to these plants, efforts are being made to fulfill their increased requirement as well,” the company said.

The number of plants having critical and super critical stocks reduced by almost a third to 11, as of August 30 2018, from that of 30 at the beginning of the fiscal. Coal stock position at linkage based thermal power stations in the country stood at 14.69 million tonnes (MTs) as of the referred date.

Government urges states to raise power purchase; plans to revive stalled projects Identifying that power demand and assured payment to power generating firms are major reasons for debt load, the Centre will pursue states for improving power procurement.

In the second meeting of the High Level Empowered Committee (HLEC), the power ministry said it was in discussions with states for improving the power demand scenario. The HLEC has been formed under the Cabinet Secretary to formalise resolution plans for the power sector.

The committee has members from the ministries of coal, power, finance and railways, and is to submit its report by September 29.

The first meeting of the HLEC was held on August 31.

The RBI, which gave the meeting a miss the first time, was not present in the second one too. The RBI was asked to be included in the meeting by an order of the Allahabad High Court.

Officials said the RBI has cited “conflict of interest” for not attending the meet.

Officials said they are looking at some short-term measures for resolving immediate issues in the sector, such as coal supply and payment by states.

Stressed power assets: Panel discusses issues, RBI plays truant

The empowered committee on stressed power assets, which met here for the first time, deliberated on possible changes in fuel allocation policies, regulatory frameworks and solutions to the vexed issue of irregular payments from discoms. It also discussed a payment security mechanism for independent power companies, which has been a long-standing demand of private power firms, sources said.

The panel, however, could not make significant headway as no representative from the Reserve Bank of India (RBI) turned up. On the agenda was a proposal to set up an asset reconstruction company (ARC) to take over banks’ stressed power assets. Implementation of the Pariwartan scheme — the ARC plan formulated by the Rural Electrification Corporation — requires amendments to the relevant RBI regulations.

The Allahabad High Court, while refusing a special waiver to the power sector from the RBI’s February 12 circular, had directed the committee to come up with a report by September end.

The HC also asked the power ministry to invite a senior RBI official to be a part of the committee.

SOLAR Supreme Court lifts stay on safeguard duty on solar imports The Supreme Court allowed the government to implement safeguard duty on imported solar panels and modules, setting aside an order of the Orissa High Court that stayed the imposition of the levy, three people aware of the development said.

The Orissa High Court will continue to hear a petition filed against the safeguard duty, but there will be no stay on imposing it, the people said. If the high court upholds the petition and rules against the safeguard duty, the amount collected from importers will be refunded, they said.

The Directorate General of Trade Remedies (DGTR) had recommended the safeguard duty on solar panels and modules imported from China and Malaysia in mid-July. It suggested 25% for the first year, 20% for the first six months of the second year and 15% for the remaining six months.

The Orissa High Court stayed the imposition of the duty until August 20 after Acme Solar Holdings, a

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developer, opposed it. The finance ministry then instructed customs officials not to insist on payment of safeguard duty, but to take a bond for the same amount while the stay was in force. For various reasons, the case was not heard on August 20, so the stay continued.

With eye on tariffs, ministry tweaks eligibility for solar tender The government has scaled down the component manufacturing requirement under its first such solar tender where developers must also agree to locally produce equipment to win projects.

The manufacturing component of the tender has been cut to 3-gigawatt capacity from 5 GW, as fears persist over developers quoting higher tariffs citing manufacturing cost. The maximum permissible tariff rate for the tender has also been brought down to Rs 2.75 per unit from an earlier cap of Rs 2.93.

Solar Energy Corporation of India, the nodal agency for the implementation of the National Solar Mission, had earlier this year floated the 5 GW solar component manufacturing tender linked to a 10 GW power purchase agreement (PPA), in a move to support the local solar manufacturing industry currently facing the onslaught of cheap imports from China.

Solar installations in India down 52% in Q2 2018: Report Solar installations in India plunged 52 percent to 1,599 MW during the second quarter of 2018, mainly due to uncertainties around trade cases and module price fluctuations, says a report.

According to Mercom India Research’s ‘Q2 2018 India Solar Market Update’, the installations stood at 3,344 MW during the first quarter.

“The drop in solar installations in Q2 2018 after four consecutive quarters of growth was expected and can be attributed to uncertainties around trade cases, module price fluctuations, and PPA renegotiations after record low bids, which contributed to a slowdown in tenders and auctions in 2017.

“All of this resulted in a weaker project pipeline for 2018,” said Raj Prabhu, CEO and Co-Founder of Mercom Capital Group.

WIND Andhra Pradesh government directs discoms to take wind power in full

The Andhra Pradesh government has clarified that state discoms have to take all the power wind developers produce and pay for it, irrespective of the capacity utilization factor (CUF) of the developer’s project, bringing to an end a major controversy in the state’s wind energy segment.

In its order setting the feed-in tariff discoms should pay wind energy developers, Andhra Pradesh’s power regulator had assumed a CUF of 23.5% for an average wind project. State discoms had been interpreting this as a directive to accept only the quantity of power a wind plant would generate if its CUF was 23.5%, and reject any additional power supplied. If the plant produced more power by adopting efficiencies that led to a higher CUF, the discoms would turn it down.

Anand Kumar, Secretary, Ministry of New and Renewable Energy (MNRE) had written to Ajay Jain, Principal Secretary in Andhra Pradesh’s Energy ministry, in December last year that “the generic tariff determined by the Andhra Pradesh Electricity Regulatory Commission (APERC) may have taken 23.5% CUF as average CUF in the state for wind power projects and therefore, it is likely that there may be certain sites where CUF is more than the average CUF”, Jain wrote to the Andhra Pradesh Electricity Regulatory Commission (APERC), as well as all state discoms, that “in the view of Secretary, MNRE’s letter, discoms have to treat wind power as “must-run stations” and take the entire power from them without curtailment.”

CCAI Monthly Newsletter September 2018

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DOMESTIC India’s coal import rises 12% to 79 MT India’s coal import rose 11.9 per cent to 78.7 million tonnes in the first four months of the current fiscal.

The country had imported 70.3 million tonnes (MT) coal in the April-July period of last fiscal, according to mjunction services, a joint venture between Tata Steel and SAIL. “Overall, coal and coke imports during the first 4 months (April-July) of 2018-19 stood at 78.79 MT, about 12 per cent higher than 70.33 MT recorded for the same period last year,” it said. The country’s coal import in July increased by 42 per cent to 20.79 MT (provisional), over 14.64 MT (revised) in the same month previous year.

The increase in coal and coke imports in July is mainly due to a 12.9 per cent growth in non-coking coal shipments.

for a policy. But, we are not aggressive as we are facing high demand in the domestic market and the initial aim is to fulfil that,” the senior Coal India official told.

“We are in process of dialogue for export to Nepal, Bangladesh and Bhutan to create a market for long term. A very small quantity of coal is exported to neighbouring countries through bilateral agreements,” he said.

Pithead coal finds comparatively low interest due to evacuation and cost issues. With sudden spiralling demand from the power sector, the pithead stock had reduced to 23 million tonne now.

In the recent months the miner was failing to fulfil coal demand for power and non-power sectors like aluminium and cement sector.

Coal India had revised its internal production target to 652 million tonne against 630 million tonne fixed earlier following pressure from the ministry to increase production.

Coal India wants a coal export policy before finalising commer- Coal India supplies 30% more cial contracts for exporting the coal to Tamil Nadu for meeting demand dry fuel Coal India wants a policy on coal exports before it could finalise commercial contracts for exporting the dry fuel, a senior CIL official said. “There is need

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Coal India has decided to supply 16 goods train full of coal to Tamil Nadu Generation and Distribution Corporation every day as demand for power in the state has increased.

Sixteen rakes would send around 6.1 lakh tonnes of coal per day, of which 4.95 lakh tonnes would be supplied by Coal India subsidiary Mahanadi Coalfields while 76,000 tonnes would be supplied by Eastern Coalfields. The rest at around 38,125 tonnes would be supplied by Central Coalfields.

During August and September, the power generation and distribution company received maximum wind power support from their wind based power generating units, resulting in the subdued generation by thermal units.

Coal India has advised its subsidiary coal companies to ensure supplies to Tangedco for enabling them to build comfortable coal stock. Coal India has also requested Indian Railways to supply more rakes to ensure delivery of coal to Tangedco as per their requirement.

CEMENT CIL gets 27% higher price in auction for cement producers Cement producers booked 92% of 4.65 million tonnes offered annually for five years by Coal India at a recent e-auction held for cement companies. The fuel supplier managed to command an average premium of 27% over its notified price.

Average premium for the coal booked was Rs 2,214.47 per tonne, which was offered at an average price of Rs 1,747.5 per tonne by the fuel supplier. Coal India is expected to get a total Rs 944.18 crore per tonne annually, around Rs 200 crore more than if it was sold at notified price.

According to a senior Coal India executive, in FY18, Coal India earned an average realisation of Rs 1,841 per tonne from various e-auctions and Rs 1,257 per tonne from coal sold at notified price. “Notified prices for the non-power sector including cement are 20% higher than the power sector. Thus, premiums fetched at the current auction, when compared to the notified prices of the power sector, average out to a premium of almost 47%,” a senior Coal India executive said.

Crumbling demand dogs Indian cement maker One of India’s most acquisitive companies is buying up cement kilns across the country, going from big to bigger. It’s got the right plan, but who’s buying the cement and actually building?

Ultratech Cement Ltd. is one of the world’s biggest cement manufacturers, with the capacity to put out 90 million tons a year from plants sprinkled across India. It purchased distressed assets from Jaiprakash Associates Ltd. and is battling to buy even more out of bankruptcy.

Ultratech is taking a smart tack in India’s fragmented cement industry: consolidation. After its acquisitions, the company, majority-held by the conglomerate Aditya Birla Group, will hold around 40 percent of the western and central Indian markets.

Cement is big business for the Birla Group, whose industry spans textiles to telecom. It makes up more than 60 percent of the Group’s consolidated Ebitda, having pulled in $1 billion in the last fiscal year. The dividends from Ultratech are the company’s biggest and help fund its broader ambitions.

Meanwhile, Ultratech’s Ebitda margins are above global cement and aggregate peers at around 18 percent; its shipments rose 21 percent in the last fiscal year ended March.

With volume, comes pricing power. While that hasn’t fully materialized yet — India’s cement prices rose just 1 percent last quarter — consolidation will eventually give Ultratech more leeway. The company needs to raise prices with the costs of inputs like petroleum coke ticking up and a depreciating rupee.

STEEL Steel Minister asks PSUs to match pvt players to ramp up steel production In order to emerge as a competitive force internationally in steel sector, Indian PSUs will have to follow practices of private sector firms that account for 8082 per cent of the domestic production, Union Minister Chaudhary Birender Singh has said. The steel CCAI Monthly Newsletter September 2018

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minister has also called for snatching opportunities from competitors like China to emerge as a global player in steel.

es in FY16 and FY17 and this year it is resisting attempts to borrow and pay dividend to shareholders.

The government owns a 75% stake in the firm.

“The PSUs, which contribute about 18-20 per cent of the steel production, should try to learn from the private sector, which accounted for the balance 80-82 per cent of the production, if India has to emerge as a strong and competitive force internationally,” minutes of a recent meeting quoted Singh as saying.

“The company suffered an overall loss in 2017-18. We are thus unable to pay dividend to the government.

It is only in the third and fourth quarters of 2017-18 that we earned a profit, which continued in Q1201819. While the scenario has improved, we need to keep earning profits to repay our debt,” a SAIL spokesperson told.

The minister also underlined the need for strengthening the country’s position in the steel sector, while focussing on the requirement of producing high quality alloy.

Singh said the steel industry had come out of its crisis in the last 3-4 years and was in a position to look forward towards growth.

Tariff negotiations with US underway: Steel Minister Steel Minister Chaudhary Birender Singh said negotiations are underway with the United States (US) over 25 per cent tariff it had imposed on steel imports.

US President Donald Trump had earlier imposed a 25 per cent import tariff on steel and 10 per cent on aluminium.

However, the minister said there would not be any immediate impact on domestic steel exports as India sends a marginal amount of alloy of its shipment to the US. Singh had earlier said that the 25 per cent tariff imposed by the US on steel import can ‘indirectly’ affect the domestic sector.

“The US decision to impose 25 per cent tariff on steel imports will have negligible direct impact (on India’s export) as India’s share of US Steel imports is very small as compared to other countries but there might be an indirect impact,” he had said.

SAIL seeks dividend exemption from government Steel Authority of India (SAIL) has sought permission to skip paying dividend to the government of India for the third year in a row, citing losses suffered by the state-owned company in 2017-18.

SAIL was exempted from paying dividend due to loss-

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JSW Steel to expand Vijayanagar plant capacity to 18 mn tonnes a year: Sajjan Jindal Leading integrated steel manufacturer JSW Steel plans to scale up the capacity of its manufacturing plant in Vijayanagar, Karnataka to 18 million tonnes per annum (MTPA), its chairman and managing director Sajjan Jindal has said.

“Our plan is to take to the next step to 18 MTPA from 13 MTPA,” Jindal said.

In June, JSW Steel had announced its plans to invest Rs 7,500 crore until March 2020 to increase the production capacity at its Vijayanagar facility to 13 MTPA. “Hopefully, in the next two years we will start the work there,” he said.

When asked as to how much money is the company going to invest in the expansion, he said, “I don’t know the money numbers.”

JSW Steel Deputy Managing Director Vinod Nowal also said the company is planning to expand capacity of its at Vijayanagar facility to 18 MTPA. The plant currently has a 12 million tonnes per annum (MTPA) capacity.

RAILWAYS Coal India asked to speed up siding pact with railways In the wake of shortage of fuel in thermal power

plants due to inadequate transportation facilities, Coal India (CIL) has been asked to expedite the signing of private siding agreement with Railways. The process, which started in 2014, has been shuttling between the two ministries since then.

A railway siding is an area which is used for loading and unloading of coal in train rakes.

The Railway Board had circulated a draft private siding agreement in August 2014, meant exclusively for CIL for ferrying coal. After a series of meetings and communications, CIL, in February 2017, conveyed its contentions on some of the points in the Railway Board’s drafts to the railways.

CIL claims that it received no further communication from Railways on the points of disagreement, which included cost escalation clauses, staff costs, interest rates and other financial issues.

After the Railway Board allowed zonal railway authorities to modify siding agreements in February this year, CIL has asked its subsidiaries to execute the agreements with their respective zonal authorities.

According to sources, coal and railway minister Piyush Goyal wants the agreements to be implemented

by December 28, 2018. Currently, the coal ministry is constructing several railway sidings such as the North Tisra-South Tisra, Magadh and North Urimari

siding with a cumulative expenditure of about Rs 905 crore.

Indian Railways’ cheap fares make your electricity tariffs high; here is how Indian Railways (IR) has traditionally been saddled with dual expectations: being a public utility that transports citizens of a largely poor country on the one hand and a commercial entity that must be profitable on the other. Walking this tightrope has entailed IR overcharging its freight customers to compensate for under-recoveries in its passenger segment. But this exercise may be a counter-productive one, a recent research report has suggested.

According to a study conducted by Brookings India, IR overprices coal freight by about 31% to offset its “social obligation”. This, in turn, raises the tariffs people have to pay for the power they consume. The math is quite simple. Coal comprises 44% of IR’s freight revenues. With every unit of electricity requiring about 63 grams of coal, the transportation cost of coal ranges from Rs 0.13/unit to Rs 1.85/unit, depending on the distance it is ferried by railway rakes – the average cost at which states buy power from non-renewable sources is Rs 3.53/unit.

CCAI Monthly Newsletter September 2018

| 17

GLOBAL Australian coal exports hit record high Australia’s thermal coal exports have grown 14 percent on the back of high demand from Asia.

Australian Bureau of Statistics’ (ABS) data released revealed that the value of thermal coal exports rose 14 percent in July to 2.45 billion Australian dollars (1.74 billion U.S. dollars).

Export volume rose to an all-time high of 19.87 million tonnes; a rate that, if upheld, would see Australia export 238 million tonnes of thermal coal per year.

Andrew Cosgrove, a mining analyst for Bloomberg Intelligence, said that coal prices would remain high for the remainder of 2018 because of demand in China and India.

Coal-fired power generation in China was up 7.3 percent between January and July compared to the same period in 2018.

“As a result, we expect an even tighter seaborne market by the end of the year,” Cosgrove told.

“Overall, (Australian) exports appear to be supported by sustained demand in China.”

18 | CCAI Monthly Newsletter September 2018

Thermal coal, also known as steam coal, is most commonly used for power and heat generation

Australian Gladstone port’s Aug coal exports hit 4-month low at 5.35 million mt Coal exports from Gladstone port in Australia’s Queensland state hit a four-month low in August as volumes to key destinations Japan and India fell while to South Korea remained strong, Gladstone Ports Corporation data showed.

A total 5.35 million mt of mostly metallurgical coal was shipped from Gladstone in the month, down 10% year on year and down 8% from July, the data showed. The total was also down from a 17-month high of 6.35 million mt in May, but had not been above 5 million prior to that in 2018.

Over January-August 42.89 million mt of coal was exported from Gladstone, equating to an annualized rate of 64.42 million mt; the 2017 total was 68.29 million mt.

However exports to South Korea, at 1.2 million mt, were up 108% on year and up 1% from July, and the highest since at least July 2013. Over January-August, exports to South Korea totaled 7.37 million mt,

equating to an annualized rate of 11.07 million mt; the 2017 total was 9.95 million mt.

traffic due to Hurricane Florence. Norfolk Southern says it will issue embargoes to coal shippers affected by Florence. Any railcars enroute to the Port will be held at yards.

US shovels more coal exports into Asia Indonesia sets Sep HBA thermal U.S. coal exports to Asia surged in 2017, and there is coal price at $104.81/mt, up 14% an argument to be made for America to become an even bigger global supplier of the fuel, a Nikkei Asian on year Review study has found.

By volume, U.S. coal exports to Asia doubled last year, compared with 2016. The total reached 32.8 million short tons — a short ton being the equivalent of 907kg. Asia-bound exports of steam coal used for power generation, in particular, more than tripled.

“These export increases have nothing to do with policy, and everything to do with economics,” said Elias Johnson, coal analyst for the U.S. Energy Information Administration.

With the use of coal diminishing in the U.S., the country’s shipments to Japan grew 68%, the equivalent of an additional 3.1 million short tons. To put the extra amount in perspective, imagine piling all that coal into the shape of a tower. The result would be as tall as the 634-meter Tokyo Skytree broadcasting tower, while measuring 68 meters wide and deep.

Coal exports face delays as U.S. East Coast rail service slows for Florence Hurricane Florence will interrupt the main rail and maritime conduits for U.S. coal exports, according to Susquehanna Financial Group.

Susquehanna’s rail analyst Bascome Majors says CSX and Norfolk Southern are most exposed to any service interruptions caused by Florence “with the most notable immediate risk being East Coast coal export infrastructure in Virginia (Hampton Roads) and Baltimore.”

Norfolk Southern operates the Lamberts Point transloading facility at the Port of Virginia, which can process up to 48 million tons annually and load the largest bulk ships with coal. CSX services the Dominion Coal Terminal in the Port.

The Port of Virginia saw coal volume of 11.6 million tons in the second quarter, a 36% gain from the same time last year. The Port of Virginia is closed to ship

Indonesia’s Ministry of Energy and Mineral Resources set its September thermal coal reference price, also known as Harga Batubara Acuan or HBA, at $104.81/ mt, down 2.8% from August but up 13.8% year on year.

The ministry had set the price for August at $107.83/ mt, and for September 2017 at $92.03/mt.

The HBA is a monthly average price based 25% each on Platts Kalimantan 5,900 kcal/kg GAR assessments, Argus-Indonesia Coal Index 1 (6,500 kcal/kg GAR), Newcastle Export Index (6,322 kcal/kg GAR) and globalCOAL Newcastle (6,000 kcal/kg NAR).

In August, the daily Platts FOB Kalimantan 5,900 kcal/kg GAR coal assessment averaged $77.68/mt, down from $82.96/mt in July, while the daily 7-45 day Newcastle FOB price for coal with a calorific value of 6,300 kcal/kg GAR averaged $118.29/mt, compared with $120.74/mt in the previous month.

The HBA price for thermal coal is the basis for determining the prices of 77 Indonesian coal products and calculating the royalty producers have to pay for each metric ton of coal sold.

It is based on 6,322 kcal/kg GAR coal with 8% total moisture content, 15% ash as received and 0.8% sulfur as received.

Indonesian coal miners to increase 2018 production: ministry A group of Indonesian thermal coal miners have agreed to increase production for 2018 to around 507 million mt, a spokesman for the Indonesian Ministry of Energy and Mineral Resources told.

Thirty-two coal producing companies had proposed the increase from the previous target of 485 million mt, the spokesman said.

The increased production is expected to be almost fully dedicated to the export market, the spokesman CCAI Monthly Newsletter September 2018

| 19

said, as relatively high export prices for most of the year were attractive to the producers, while domestic obligations were of less interest.

FOB Kalimantan prices for 4,200 kcal/kg GAR thermal coal have moved within a wide range so far in 2018, peaking at $51.50/mt in late February -- the highest level since Platts began the assessment in 2012 -and trading as low as $37.50/mt in late August.

The government thermal coal reference price, also known as Harga Batubara Acuan, or HBA -- which incorporates Platts Kalimantan 5,900 kcal/kg GAR price -- has also achieved multi-hear highs in 2018 with the August reference price of $107.83/mt being the highest level.

Russia to take on Australia and Indonesia in Asian coal market Competition is likely to heat up in the Asian coal market as Russia seeks new buyers, challenging traditional suppliers Australia and Indonesia.

Russia is looking to Asia, where demand for the commodity is likely to grow as many new coal-fired power plants are about to go online in India and Southeast Asia.

At the end of August, Russian Energy Minister Alexander Novak unveiled an ambitious target of doubling the country’s coal exports to Asia by 2025 from around 100 million tons in 2018.

20 | CCAI Monthly Newsletter September 2018

SUEK, Russia’s largest coal miner, is expanding the port of Vanino, in Russia’s Far East. The port began commercial operation in 2009 and the port is expected to ship around 20 million tons of coal this year.

SUEK told the Nikkei Asian Review it plans to raise the port’s annual export capacity by 80% to 40 million tons. The company wants to sell more to Thailand, Vietnam and other Southeast Asian countries, where demand is expected to be strong, as well as China, Japan and South Korea, historically the three main importers in Asia.

South Africa: Coal reserves reach crisis point South Africa’s power utility, Eskom, has announced that its coal reserves have reached crisis point with a majority of its power stations operating at below the set 21-day margin which prevents services from being affected.

During the announcement, Eskom said it currently has less than 20 days worth of coal supplies at 10 of its 15 power stations, positing a thread to the national power supply.

The constraints at the power plants in the coal-rich Mpumalanga province are mainly due to the company that supplies them being under business rescue.

Among the affected power stations are Hendrina, Komati and Majuba.

In addressing the issue, Eskom spokesperson Khulu Phasiwe said in an interview with Business Day TV that the utility had informed the National Energy Regulator (NERSA) and is working towards recovering the coal reserves.

With Best Compliments From:

Sharda Ma

( )

COAL MERCHANTS, IMPORTERS & HANDLING AGENTS INDIA SOUTH AFRICA INDONESIA SINGAPORE HONG KONG NIGERIA

UGF 1& 2, Kanchenjunga Building, 18 Barakhamba Road, New Delhi-110001, India P : +91 11 23354046/47 F : +91-11-23354047 E : corporate@shardamaa.com W : www.shardamaa.com

IN PARLIAMENT GOVERNMENT OF INDIA MINISTRY OF COAL RAJYA SABHA Q. No. 263. SHORTFALL IN DOMESTIC SUPPLY OF COAL 10.08.2018 SHRI DEREK O’BRIEN: Will the Minister of COAL be pleased to state: (a) whether it is a fact that the domestic supply of coal is suffering from a shortfall; (b) if so, the details thereof; (c) whether Government intends to encourage imports to meet the shortfall; (d) if so, the details thereof; and (e) the steps taken by Government to increase the domestic supply of coal?

ANSWER MINISTER OF RAILWAYS, COAL & FINANCE AND CORPORATE AFFAIRS (SHRI PIYUSH GOYAL) (a) to (e): A statement is laid on the table of the House.

Statement referred to in reply to parts (a) to (e) of Rajya Sabha Starred Question No.263 for answer on 10.08.2018 asked by Shri Derek O’Brien.

22 | CCAI Monthly Newsletter September 2018

(a) & (b): In 2018-19 (up to 31.07.2018) the overall offtake/dispatch from Coal India Limited (CIL), Singareni Collieries Company Limited (SCCL) and Captive mines sources was 240.9 Million Tonnes (MT) (provisional). This is a growth of 11.17% over the offtake/ dispatch during the corresponding period of last year. (c) & (d): For the Financial Year 2018-19, Ministry of Power has projected annual domestic coal requirement 615 MT (525 MT from Coal India Limited, 53 MT from Singareni Collieries Company Limited and 37 MT from Captive mines). This requirement is being met by supply of coal from domestic sources. The domestic coal supplied to power sector in 2018-19 (up to 31.07.2018) is 194.69 MT (provisional). Due to these efforts of enhanced domestic coal supply to power plants, the coal import by power plants has reduced from 80.58 MT in 2015-16 to 56.41 MT in 2017-18. In 2018-19 (up to 30.06.2018), the coal import by power sector is 14% less than the import in the corresponding period of last year. Coal and coke, being under Open General License as per import policy of the Government, are imported by various traders and consuming industries as per their requirement. However, the gap between demand and

domestic supply of coal cannot be bridged completely as there is insufficient availability of coking coal and the power plant which are designed to consume imported coal will continue to import coal for their power generation. (e): The progress of production and offtake of CIL is reviewed on a regular basis. New rail lines are being laid for smooth evacuation of increased coal production from the mines of growing coalfields of SECL, MCL and CCL. Further, coal supplies to Power sector is monitored regularly by an Inter- Ministerial Sub Group comprising representatives of Ministries of Power, Coal, Railways, Shipping, Central Electricity Authority, NITI Aayog, CIL etc.

A committee of Secretary (Coal), Secretary (Power) and Member (Traffic), Railway Board has also been jointly reviewing the coal transportation and supply on a regular basis.

Q. No. 1973. RECOMMENDATIONS ON COAL LINKAGE RATIONALIZATION 03.08.2018 SHRI N. GOKULA-KRISHNAN: Will the Minister of COAL be pleased to state: Sr. No

State/ Developer

1

Maharashtra

2 3

Haryana (JV of NTPC & HPGCL)

4

Gujarat

5

West Bengal

6 Total

Uttar Pradesh

Power Plant Bhusawal Paras Chandrapur RGTPP APCPL, Jhajjar Wanakbori Ukai Gandhinagar Bakreshwar Kolaghat Santaldih Paricha

Total coal movement rationalization of 54.76 MT has taken place with annual potential savings of Rs. 3354 crore. (c) & (d): An Inter-Ministerial Task Force (IMTF) was constituted in July, 2017 to undertake a comprehensive review of existing coal sources of Independent Power Producers (IPPs) having linkages and consider the feasibility for rationalization of these sources with a view to optimize transportation cost given the various technical constraints. The underlying objective behind the exercise was to reduce the landed cost of coal due to reduction in transportation cost. The methodology for linkage rationalization for IPPs has been accepted by the Government and the same has

(a) whether it is a fact that the six State-owned power plants had rationalized less than 13 MT in 2017, resulting in estimated annual savings of â‚š 774 crore in transportation costs; (b) if so, the details thereof; (c) whether it is also a fact that Government has approved the recommendations of inter- Ministerial task force on coal linkage rationalization for private power plants, which apart from yielding savings to power plants from lower coal transportation costs, might also ease railway infrastructure by reducing coal ferrying distance; and (d) if so, the details thereof?

ANSWER MINISTER OF RAILWAYS, COAL & FINANCE AND CORPORATE AFFAIRS (SHRI PIYUSH GOYAL) (a) & (b) : In 2017, CIL has done source rationalization of 12 state owned power plants based on the requests from these plants. The quantity rationalized was about 13 MT. The approximate potential annual savings in transportation cost by these power plants would be to the tune of Rs 774 crore, details of which are as under: Quantity rationalized (in MT) 2.312 1.204 1.525 1.33 1.13

Potential Annual Savings (in Crore) 415 50 31

3

240

1.2

2

1.2 12.901

36 774

been circulated on 15.05.2018 to the CIL/SCCL to implement the methodology.

Q. No. 1975. SETTING UP OF NEW COAL WASHERIES 03.08.2018 SHRI DHIRAJ PRASAD SAHU: Will the MINISTER OF COAL be pleased to state : (a) whether the Coal India Limited (CIL) proposes to set up new coal washeries in the country, especially in Jharkhand; (b) if so, the details thereof and the location identified therefor along with their capacity; (c) whether these washeries would help in improving the quality of coal in terms of ash percentage and CCAI Monthly Newsletter September 2018

| 23

heat value; and (d) if so, the details thereof?

ANSWER MINISTER OF RAILWAYS, COAL, FINANCE AND CORPORATE AFFAIRS ( SHRI PIYUSH GOYAL) Sl. Washery/ CPP No. A. Coking Coal: 1 Madhuband 2 Patherdih-I 3 Dahibari 4 Patherdih-II 5 Bhojudih 6 Dugda (New) 7 Moonidih (New) 8 Tapin 9 Kathara (New) Sub-Total B. Non-Coking Coal: 10 Ashoka 11 Konar 12 Karo 13 Basundhara 14 Ib Valley 15 Hingula 16 Jagannath 17 Kusmunda 18 Baroud Sub-Total Grand Total (Coking and Non-coking)

Capacity (Mty)

(a) &(b): CIL proposes to set up 18 (eighteen) new coal washeries/CPP (Coal Preparation Plant)- 9 (nine) Coking coal and 9 (nine) non-coking coal - in the country. 11 (eleven) of them are proposed to be set up in Jharkhand- 8 for coking coal and 3 for non-coking coal. The details of these 18 washeries are given below: CIL Subsidiary

Location

5.00 5.00 1.60 2.50 2.00 2.50 2.50 4.00 3.00 28.10

BCCL BCCL BCCL BCCL BCCL BCCL BCCL CCL CCL

Dhanbad Distt, Jharkhand Dhanbad Distt, Jharkhand Dhanbad Distt, Jharkhand Dhanbad Distt, Jharkhand Purulia Distt, West Bengal Bokaro Distt, Jharkhand Dhanbad Distt, Jharkhand Ramgarh Distt, Jharkhand Bokaro Distt, Jharkhand

2.00 7.00 3.50 10.00 10.00 10.00 10.00 10.00 5.00 67.50

CCL CCL CCL MCL MCL MCL MCL SECL SECL

Chatra Distt, Jharkhand Bokaro Distt, Jharkhand Bokaro Distt, Jharkhand Sundergarh Distt, Odisha Jharsuguda Distt, Odisha Angul Distt, Odisha Angul Distt, Odisha Korba Distt, Chhattisgarh Raigarh Distt, Chhattisgarh

95.60

(c)& (d): The coal washing will improve the quality of domestic coal by reducing Ash content and improving Calorific (heat) value of the coal. Coal is washed to remove the inherent and extraneous impurities so that the carbon content per unit weight is increased.

Increased Carbon content leads to an enhancement of Heat Value (GCV) and thus improves the quality.

For coking coal, too, the quality is improved as impurities are removed through washing.

transported to the destination due to lack of transportation facilities during the last three years and the current year; (d) the details of the projects affected so far; and (e) the steps taken/being taken by the Government for providing adequate infrastructural facilities for the transportation of coal in the country?

Q. No. 1976. INADEQUATE COAL TRANSPORTATION FACILITIES 03.08.2018

MINISTER OF RAILWAYS, COAL, FINANCE & CORPORATE AFFAIRS (SHRI PIYUSH GOYAL) (a) & (b): By and large, transport facility is not a constraint on coal production. There was an increase of 105 MT in production of Coal India Limited between 2013-14 and 2017-18 compared to an increase of only 31.15 MT in the preceding five years between 2009-10 to 2013-14. However, there are a few mines in Mahandi Coalfields Limited, Central Coalfields Limited and South Eastern Coalfields Limited which are

SHRI SANJAY SETH: Will the Minister of COAL be pleased to state: (a) whether the production of coal in the country is being affected due to inadequate transportation facilities; (b) if so, the details thereof and the reasons therefor; (c) the total quantum of coal which could not be

24 | CCAI Monthly Newsletter September 2018

ANSWER

unable to operate at optimal capacity due to coal evacuation constraint. (c): The off take of Coal India Limited has increased from 534.20 MT in 2015-16to 581.5 MT during 201718. The increase in off take of CIL between 2013-14 and 2017-18 is 109.12 MT as compared to an increase of 55.04 MT between 2009-10 to 2013-14.

Annual average rakes provided by Railways to CIL for transportation of coal has increased from 212.8 (rakes/day) in 2015-16 to 229.2 (rakes/day) in 201718. Transportation by other modes (MGR, Belt and Rope) by CIL have also increased from 105.52 MT in 2015-16 to110.22 MT in 2017-18. Therefore, there is adequate transportation facility to transport coal to the destination. (d): The Projects partially affected due to transport constraint are Kulda and Basundhara (West) Extension of MCL in Odisha, Magadh and Amrapali of CCL in Jharkhand and Chhaland Baroud of SECL in Chhatisgarh. However, high level meeting of the monitoring committee of Ministry of Coal and Railways is held regularly to address the issue of evacuation bottlenecks. A 50.30 Km Jharsuguda-Barpali-Sardega single rail line has been constructed which can despatch 10 to 12 rakes per day.

With the opening of Tori-Balumath railline, at least 3 MT additional production in likely to take place from the Magadh-Amarpali area of CCL. (e): The following railway infrastructure projects have been taken up for improving coal evacuation in Chattishgarh, Jharkhand and Odisha: 1. Tori-Shivpur–Kathotia New BG Line (Total length 93.45 Km) in Jharkhand: Tori-Balumath Railline section has been inaugurated on 09.03.2018 and currently coal dispatch is going on. Remaining work beyond Balumath is under progress.

2. Mahanadi Coal Railway Limited (MCRL) PROJECTS: The project consists primarily of 3 components: Angul–Balaram (12.9km), Balaram- Putagadia and Jarapada-Putagadia-Tentuloi ( 55Km ) in Odisha.

3. Chhattisgarh EastRailway Ltd. (CERL) (Length: 132 Km): Bhupdeopur-Gharghoda-Dharamjaigarhu pto Korba with a spur from Gharghora to Donga Mahuain Chhatisgarh.

4. Chhattisgarh East-West Railway Ltd. (CEWRL) (Length:135Km): Gevra Road to Pendra Road via Dip-

ka, Katghora, Sendurgarh, Pasan in Chhatisgarh.

Q. No. 1977. ALLOCATION OF COAL BLOCKS TO PRIVATE COMPANIES 03.08.2018 SHRI AKHILESH PRASAD SINGH: Will the Minister of COAL be pleased to state: (a) the details of coal blocks allocated to private companies under the command areas of BCCL, ECL and CCL; (b) the details of the coal produced and transported by these companies, so far, company-wise; (c) whether any complaints regarding sale of such coal to coal washeries and in open market has been received; (d) if so, the action taken by Government against such companies along with remedial measures taken in this regard; and (e) the revenue earned by the Central Government and the State Governments, including Jharkhand, through the auction?

ANSWER MINISTER OF RAILWAYS, COAL, FINANCE AND CORPORATE AFFAIRS (SHRI PIYUSH GOYAL) (a) & (b): Auction of Coal Blocks is undertaken as per provisions contained in the Coal Mines (Special Provisions) Act, 2015. These auctions are not on the basis of command area of any CIL subsidiary. So far, 26 Coal Mines have been auctioned (out of originally 31 auctioned Coal Mines, Coal Mine Development and Production Agreements have been terminated in respect of 5 Coal Mines). Out of 26 auctioned Mines, 25 have been auctioned to Private Companies and one to Govt. Company. Details of Coal Blocks allocated to private companies are at Annexure-I. Details of Coal produced and transported by these companies are at Annexure-II. (c): No, Sir. (d): Does not arise, in view of (c) above. (e): The entire revenue through auction of coal mines devolves to the coal bearing State Government concerned and is being deposited with them. Details of revenue earned by the State Governments through the auction are as under:

S.No.

State

Revenue generated (Rs. in crore)

1.

Chhattisgarh

1428.6

2.

Jharkhand

482.78

3.

Madhya Pradesh

743.19

4.

Maharashtra

134.85

5.

Odisha

51.57

6.

West Bengal

419.4

Total

3260.39

CCAI Monthly Newsletter September 2018

| 25

Annexure - I Sl. No

Name of Coal Mine

State

Successful Allottee

1

Chotia

Chhattisgarh

Bharat Aluminum Co.Ltd (BALCO)

2

Gare Palma IV‐4

Chhattisgarh

HINDALCO (HIL)

3

Gare Palma IV‐5

Chhattisgarh

HINDALCO (HIL)

4

Gare‐Palma Sector‐IV/8

Chhattisgarh

Ambuja Cements Ltd

5

Kathautia

Jharkhand

HINDALCO (HIL)

6

Tokisud North

Jharkhand

Essar power MP Ltd

7-8

Brinda and Sasai

Jharkhand

Usha Martin Ltd

9

Dumri

Jharkhand

HINDALCO (HIL)

10

Lohari

Jharkhand

Aranya Mines Pvt Ltd

11

Meral

Jharkhand

Trimula Industries Limited

12

Moitra

Jharkhand

JSW Steel Ltd

13

Ganeshpur

Jharkhand

GMR Chhattisgarh Energy Limited (GMR)

14

Jitpur

Jharkhand

Adani Power Limited

15

Bicharpur

Madhya Pradesh

UltraTech Cement Limited

16

Sial Ghoghri

Madhya Pradesh

Reliance Cement Co Pvt Ltd (RCCPL)

17

Amelia North

Madhya Pradesh

Jaiprakash Power Ventures Ltd. (JPVL)

18

Belgaon

Maharashtra

Sunflag Iron and Steel Company Limited (SIL)

19

Marki Mangli III

Maharashtra

B.S. Ispat Limited

20

Nerad Malegaon

Maharashtra

Indrajit Power Pvt Ltd

21

Marki Mangli-I

Maharashtra

Topworth Urja and Metals Ltd (TUML)

22

Majra

Maharashtra

Jaypee Cement Corporation Limited

23

Talabira‐I

Odisha

GMR Chhattisgarh Energy Limited (GMR)

24

Ardhagram

West Bengal

OCL Iron & Steel Ltd.

25

Sarisatolli

West Bengal

CESC Limited (CESC)

Annexure-II

Name of the Company/Coal Block

Dispatch (in Million Tonnes )

Production (in Million Tonnes )

2017-18

2018-19 (up to July-18)

2017-18

2018-19 (up to July-18)

CESC / Sarisatolli

1.77

0.60

1.83

0.75

GMR-Talabira -I

0.25

0.00

0.27

0.00

HIL-Gare Palma IV/5

0.75

0.11

0.68

0.11

BALCO / Chotia

0.00

0.00

0.00

0.00

HIL-Gare Palma IV/4

0.91

0.29

0.90

0.39

SIL / Belgaon

0.27

0.08

0.27

0.09

HIL/Kathautia

0.59

0.27

0.93

0.00

JPVL / Amelia (North)

2.80

1.56

2.80

1.47

RCCPL/ Sial Ghogri

0.07

0.02

0.06

0.02

TUML / Marki Mangli - I

0.17

0.10

0.45

0.11

The figures are provisional.

26 | CCAI Monthly Newsletter September 2018

MONTHLY SUMMARY OF DOMESTIC COAL Comparative Price of Domestic Coal: Power/Non-power. *The price shown in the Chart below is without: (a) Surface Transportation Charges. (b) State specific taxes. (c) Coal company or area wise charges if any. (d) Evacuation Facility Charges INR 50 per tonne w.e.f. 00:00 of 20.12.2017 GCV (Kcal/kg) (Mid-value)

G3-6400-6700

G5-5800-6100

G7-5200-5500

G10-4300-4600

G11-4000-4300

G12-3700-4000

Basic ROM price (Rs./te)

3144/ 3144

2737/2737

1926/2311

1024/1228

955/1145

886/1063

Tentative Ex-Mine Price*

4447/4447

3941/3941

2932/3411

1809/2063

1724/1959

1638/1858

COAL Coal India Ltd is optimistic about an aspirational production target of 652 million tonne for the fiscal year 2018-19, the mining major’s Chairman A K Jha said. The state-run company is also planning to rationalise costs by closing down 53 of its 174 underground mines this fiscal. Coal India has officially pushed back a target to produce 1 billion tonnes annually by six years to 2026. The goal will be achieved by 2025-26 because of changes in the country’s carbon emission targets and other reasons.

The volatility of the rupee in the last two weeks has come as a double whammy for coal consumers other than the power sector. Deprived of even the contracted quantities from Coal India which is struggling to meet the demand from the power sector despite double-digit growth in the fuel production, non-power consumers (like steel, cement etc) are increasingly dependent on imports to meet their demand. India’s coal import rose 11.9% to 78.7 million tonnes in the first four months of the current fiscal. The country had imported 70.3 million tonnes (MT) coal in the April-July period of last fiscal.

RAILWAYS Transportation hurdle causing coal crisis at power units. Coal crisis became evident after railway rakes were minimised for transportation of coal and stopped transportation for short distances. Few months earlier Ministry of Railway issued a directive stating not to provide rail rakes for transportation of coal within the 60 kilometer radius from the mines to the power units, informed the official. It is estimated that earlier more than 300 rakes were deployed by the Indian Railway for the transportation of coal, which is now reduced to about 200 rakes, and stopped to provide rakes within the 60 kms distance of mines, severely impact on the stock of coal at the power units, he said.

The Railways will review the impact of fuel price increase and its pricing strategy. A Railway Ministry official said the national transporter is yet to take a call on whether it will absorb the entire increase in diesel costs or consider passing them.

Southern Railway handled 35 per cent more cargo in April-August 2018 compared to the same period last year, touching 14.85 million tonnes and surpassing the target set by the Railway Board.

POWER Coal India and Singareni Collieries Company are offering independent power producers the option of swapping their sources of fuel supply to cut the cost of transportation and generation. The Central Electricity Authority will oversee the one-time offer for power generators willing to pass on the savings to customers. This would also require regulatory approval.

The draft amendments to the Electricity Act, 2003 is finally out and it aims to keep at pace with the changing market dynamics, increasing renewable capacity and challenge of providing quality power supply.

28 | CCAI Monthly Newsletter September 2018

Spot power prices touched over eight-year high of Rs 14.08 per unit in the day ahead market (DAM) on Indian Energy Exchange, mainly driven by higher demand. “Spot power price for supply touched over five year high of Rs 14.08 per unit in trading at Indian Energy Exchange (IEX),” a source said. The previous high was recorded at Rs 13.90 per unit in April 2010.

The government plans to auction power supply contracts with attached coal supplies, ease norms to allow coal usage for short-term power contracts and put in place a payment mechanism to help power projects recover dues in time from state electricity distribution companies to alleviate the sectoral stress to a large extent.

State-run monopoly miner Coal India (CIL) plans to supply 17.5 million tonnes of coal annually to captive power producers for five years through an auction that started last week and is slated to conclude on October 10. The average base price for the fuel on offer is around Rs. 1,343 per tonne while premiums offered by consumers for a variety of coal from South Eastern Coalfields have touched a high of Rs. 650 per tonne.

CEMENT Hit by cheaper cement imports from Pakistan, domestic manufacturers, particularly cement units based in Himachal Pradesh and Punjab, have demanded immediate tariff and non-tariff protection against the dumping from across the border.

The GST Council may take up a proposal to cut the tax rate on cement to 18 per cent from 28 per cent at its meeting later this month as the move may create more jobs and boost the economy ahead of the general elections. However, a dip in the August revenue collection could weigh on the council’s decision.

The council may not immediately cut the tax rate on the cement sector as it would have a revenue impact, sources said.

Cement producers booked 92% of 4.65 million tonnes offered annually for five years by Coal India at a recent e-auction held for cement companies. The fuel supplier managed to command an average premium of 27% over its notified price. Average premium for the coal booked was Rs 2,214.47 per tonne, which was offered at an average price of Rs 1,747.5 per tonne by the fuel supplier. Coal India is expected to get a total Rs 944.18 crore per tonne annually, around Rs 200 crore more than if it was sold at notified price.

Cement demand in southern India is increasing alongside growth in infrastructure and housing, according to N Srinivasan, chairman, India Cements. “After a long time cement demand is slowly picking up in the south, which has the problem of capacity overhang having 160Mt (out of a total capacity of 400- 425Mt in the country) against the demand of around 70- 80Mt,” said Mr Srinivasan.

STEEL India is hopeful of occupying the second slot in global steel output after China while the government has also taken steps to encourage secondary steel producers to boost performance, the Steel Ministry said. Growing in conjunction with the primary steel sector, the secondary steel sector holds enormous potential for growth and opportunities in the country, the ministry said.

India will be the brightest spot for the steel sector over the next 12-18 months, according to Moody’s Investors Service. A Moody’s statement said India’s steel consumption is rising at least 5.5 per cent to 6 per cent every year, tracking strong GDP growth of 7.3 per cent to 7.5 per cent.

India’s crude steel output increased by 8 per cent to 9 million tonnes (MT) in July this year, according to the World Steel Association. The country had produced 8.33 MT crude steel in the same month a year ago, the association said in its latest report.

The steel ministry is facilitating talks between foreign suppliers with Indian manufacturers to float joint ventures in India. The move is aimed at enhancing domestic capacity in capital goods manufacturing for the steel sector and promote the ‘Make in India’ initiative, a senior government official said. The ministry will also assist talks between the capital goods firms and steel makers to ensure adequate order flows to the proposed joint ventures.

CCAI Monthly Newsletter September 2018

| 29

30 | CCAI Monthly Newsletter September 2018

6780

56.27

Source CEA

TOTAL

52.46

61.09

14

SEP-2018

1265000

5000

13

NUCLEAR

BHUTAN IMP

38500

130000

ACTUAL*

59.25

HYDRO

2

1091500

PROGRAM

273985.51

0

THERMAL

Category

TOTAL

BHUTAN IMP

45457.42

NUCLEAR

HYDRO

221748.09

1

4

2617

107239

674

15741 108045.88

884.29

17421.16

2560.91

87179.52

3 88207

ACTUAL*

PROGRAM

54.72

59.89

15

ACTUAL SAME MONTH 2017-18

102495.5

855.1

14101.47

2671.45

84867.48

5

ACTUAL SAME MONTH 2017-18

SEP-2018

100.75

131.2

110.67

97.86

98.84

6

% OF PROGRAM (4/3)

AN OVERVIEW

60.47

58.97

16

PROGRAM

63.51

60.67

17

ACTUAL*

57.29

59.2

18

ACTUAL SAME PERIOD 2017-18

APRIL 2018 - SEP-2018

PLANT LOAD FACTOR (%)

Monitored Target Capacity Apr 2018 to (MW) Mar 2019

THERMAL

Category

SUMMARY- ALL INDIA

105.42

103.41

123.54

95.86

102.72

7

% OF LAST YEAR (4/5)

635751

2837

82233

17156

533525

8

PROGRAM

GENERATION (GWH)

ACTUAL*

635525.31

3805.22

83377.22

18911.47

529431.4

9

PERIOD : SEPTEMBER-2018

611255.19

3805.5

81384.33

17060.72

509004.64

10

ACTUAL SAME PERIOD 2017-18

99.96

134.13

101.39

110.23

99.23

11

103.97

99.99

102.45

110.85

104.01

12

% OF LAST % OF PROGRAM YEAR (9/10) (9/8)

APRIL 2018 - SEP-2018

ENERGY GENERATION REPORT

PRODUCTION AND OFFTAKE PERFORMANCE OF CIL AND SUBSIDIARY COMPANIES COAL PRODUCTION (Figs in Mill Te) SEP'18

SUB CO. ACTUAL THIS YEAR

APR'18 - SEP'18

ACTUAL SAME % MONTH LAST GROWTH YEAR

ACTUAL THIS YEAR

ACTUAL SAME MONTH LAST YEAR

% GROWTH

ECL

3.35

2.89

16

20.44

16.7

22.4

BCCL

2.37

2.33

1.8

14.58

13.57

7.5

CCL

4.14

3.81

8.7

22.8

20.85

9.3

NCL

7.99

7.16

11.5

48.38

42.8

13

WCL

3.1

2.67

16.2

16.62

15.17

9.5

SECL

9.84

10.13

-2.9

72.23

61.26

17.9

MCL

9.41

9.74

-3.4

61.21

61.4

-0.3

NEC

0.04

0.03

32

0.21

0.14

51.7

CIL

40.24

38.76

3.8

256.47

231.88

10.6

OFFTAKE (Figs in Mill Te) SEP'18

SUB CO. ACTUAL THIS YEAR

APR'18 - SEP'18

ACTUAL SAME % MONTH LAST GROWTH YEAR

ACTUAL THIS YEAR

ACTUAL SAME MONTH LAST YEAR

% GROWTH

ECL

3.38

3.05

10.6

22.49

18.44

22

BCCL

2.44

2.61

-6.6

17.03

15.52

9.7

CCL

4.55

5.24

-13.1

31.74

31.29

1.4

NCL

8.17

7.91

3.4

49.19

44.63

10.2

WCL

3.93

3.64

8

25.17

22.09

13.9

SECL

10.7

10.83

-1.2

76.47

71.83

6.5

MCL

10.71

10.26

4.4

68.47

64.9

5.5

NEC

0.03

0.04

-10.8

0.25

0.3

-15.1

CIL

43.91

43.57

0.8

290.81

269

8.1

CCAI Monthly Newsletter September 2018

| 31

MONTHLY SUMMARY OF IMPORTED COAL & PETCOKE Coal Price Index COAL

(kcal/kg)

Monthly Price - FOB

Monthly Price - FOB

Monthly Change (USD)

South Africa

6000 NAR

USD 98.00

INR 7344

-3.86

South Africa

5500 NAR

USD 61.65

INR 4444

-19.93

Australia

5500 NAR

USD 67.25

INR 4848

2.02

Indonesia

5000 GAR

USD 52.47

INR 3783

-5.08

Indonesia

4200 GAR

USD 38.48

INR 2774

-1.16

USA

6900 NAR

USD 84.44

INR 6088

1.44

PET COKE

Sulphur

Price

India-RIL(Ex-Ref.)

-5%

INR 9325

Saudi Arabia (CIF)

+ 8.5%

INR 8345($116)

USA (CIF)

- 6.5%

INR 8778($122)

Exchange Rate

Change (Monthly)

USD/INR 72.096

2.49

Coking Coal Price: Semi Soft

Low Vol PCI

Mid Tier PCI

FOB Aus

Premium Low Vol CFR China

FOB Aus

HCC 64 MID Vol CFR China

FOB Aus

FOB Aus

FOB Aus

CFR India

FOB N China

198.66

208.06

175.26

189.06

122.82

129.91

128.91

381.13

372.38

South Africa: • A new study has revealed that South Africa’s sector is in a state of crisis. This includes both mining and coal-fired electricity. Rising costs energy insecurity have made coal increasingly competitive and this could place thousands of at risk.

main export terminal, Richards Bay Coal Terminal. coal coal and less jobs

• South African thermal coal is becoming a more attractive option to traders and buyers as prices for all grades ease from record highs in July. FOB Richards Bay 5,500 kcal/kg NAR price was assessed at USD 90.40 per mt on July 9, the highest value since the assessment began in 2013. The price had since softened to USD 76.35 per mt. Such high levels kept South African coal uncompetitive against most other origins for the key markets of South and East Asia, which resulted in rising stockpiles at the country’s

32 | CCAI Monthly Newsletter September 2018

MET COKE 62% CSR

Australia: • Australia’s thermal coal exports have grown 14 percent on the back of high demand from Asia.

Australian Bureau of Statistics’ (ABS) data revealed that the value of thermal coal exports rose 14 percent in July to 2.45 billion Australian dollars (1.74 billion U.S. dollars).

• Australian miner New Hope Corp thermal coal prices would push higher in coming months, extending a rise that helped boost its profits in the last financial year.

The company said its full-year pretax profit climbed 6 % to A$149.5 million ($107.49 million) from $140.6 the year before, as markets for thermal coal priced in Australian dollars soared on the back of pollution-

linked output curbs in major supplier China.

Indonesia: • Indonesian coal suppliers have increased their domestic coal production target by 4.5 percent from a previous 485 million tonnes to a massive 507 million tonnes in the current year. All the additional tonnage will be exported. This is in direct response to China’s loosening coal policy for the 2018/2019 winter season.

• Indonesia’s Ministry of Energy and Mineral Resources set its September thermal coal reference price, also known as Harga Batubara Acuan or HBA, at $104.81/mt, down 2.8% from August but up 13.8% year on year. The ministry had set the price for August at $107.83/mt, and for September 2017 at $92.03/ mt.

USA: • Weekly US coal production totaled an estimated 15.6 million st in the week ended September 1, up 0.8% from the prior week and down 0.5% from the year-ago week, US Energy Information Administration data showed. The most recently concluded week saw the third highest production levels for the year so far, behind the week ended August 4 with just under 15.9 million st and the week ended August 18 with slightly over 15.8 million st.

• U.S. coal exports are expected to surge 10 percent in the next year according to new forecasts by the Energy Department’s statistics arm. The U.S. Energy Information Administration (EIA) predicts that while coal production will fall one percent in 2018, exports will surge 10 percent above 2017. Coal exports were up 32 percent in the first half of 2018 compared to the same time the previous year.

Pet Coke: • According to CW Research’s “Petcoke Country Market Data”, during the first half of 2018, petcoke production rose in India but contracted in China and

Brazil. In the first half of the year, petcoke output in India recorded an almost ten percent increase compared to the equivalent period of 2017, standing at 6.3 million tons. In June alone, the country’s petcoke market production declined 4.3 percent year on year.

• Seaborne thermal coal and petcoke prices rose by 16-24 per cent YoY during the 1H18 period, eroding almost four per cent of the aggregate EBITDA of LafargeHolcim and HeidelbergCement, according to a Morgan Stanley report. However, this is expected to slow or reverse into next year. Prices of seaborne thermal coal are anticipated to fall 15 per cent in 2019 compared to 1H18, with petcoke following a similar trend. This is due to lower seaborne demand from China and Japan alongside capacity expansions, which will drive the market into surplus and reduce prices.

• The Indian market is showing little interest in offers for imported, fuel-grade petcoke, with prices for the fuel largely uncompetitive, sources said this week.

Offers for US petcoke loading in October were heard at $118/mt CFR West Coast India while buying interest is said to be around $114/mt.

Shipping: • Ports reliant on coal shipments will face price declines, greater competition and restructuring as fossil fuel demand begins to decline, a new report has warned.

• Indonesia’s coal exports rose 20% year on year in July to a four-year high on the back of strong Chinese demand and high export prices, Bank Indonesia data showed. The world’s leading thermal coal exporter shipped 1.24m tonnes/day, up by 4% on the month and the highest level since March 2014. Exports in the first seven-months of the year were 14% higher than in January-July 2017, at 248m tonnes, the data showed.

• Spot shipments, however have dwindled in recent months due to the monsoon season as well as record high prices of South African coal. The reduced demand had seen South African off-spec tons flow to the European.

CCAI Monthly Newsletter September 2018

| 33

OVERALL DOMESTIC COAL SCENARIO Coal Production (in MT) Company

August, 2018

August, 2017

% Growth

April- August, 2018

April- August, 2017

% Growth

CIL

38.8

37.6

3.2%

216.2

193.1

12.0%

SCCL

4.4

4.5

-3.0%

23.4

23.2

0.6%

Overall Offtake (in MT) Company

August, 2018

August, 2017

% Growth

April - August 2018

April - August, 2017

% Growth

CIL

45.2

43.7

3.4%

246.9

225.4

9.5%

SCCL

4.5

4.8

-6.5%

25.9

25.2

2.7%

Coal Despatch to Power (Coal and Coal Products) (in MT) Company

August, 2018

August, 2017

% Growth

April – August, 2018

April – August, 2017

% Growth

CIL

36.7

34.2

7.3%

196.9

175.6

12.1%

SCCL

3.6

3.9

-7.9%

21.2

21.0

0.7%

Spot E-auction of Coal (in MT) Company

Coal Qty. Allocated August, 2018

Coal Qty. Allocated August, 2017

Increase over notified price

Coal Qty. Allocated April - August, 2018

Coal Qty. Allocated April-August, 2017

Increase over notified price

CIL

2.21

3.38

93%

15.11

19.09

85%

Special Forward E-auction for Power (in MT) Company CIL

Coal Qty. Allocated August, 2018

Coal Qty. Allocated August, 2017

Increase over notified price

Coal Qty. Allocated April - August, 2018

Coal Qty. Allocated April - August, 2017

Increase over notified price

0.99

0.00

89%

17.21

20.03

78%

Exclusive E-auction for Non- Power (in MT) Company

Coal Qty. Allocated August, 2018

Coal Qty. Allocated August 2017

Increase over notified price

Coal Qty. Allocated April - August, 2018

Coal Qty. Allocated April - August, 2017

Increase over notified price

CIL

3.47

0.32

70%

7.30

5.48

70%

Special Spot E-auction (in MT) Company

Coal Qty. Allocated August, 2018

Coal Qty. Allocated August, 2017

Increase over notified price

Coal Qty. Allocated April - August, 2018

Coal Qty. Allocated April - August 2017

Increase over notified price

CIL

0.00

0.00

-

0.00

0.35

-

34 | CCAI Monthly Newsletter September 2018

CCAI Monthly Newsletter September 2018

| 35

REGISTERED

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