Indian Miners Coal supply to Domestic Power Sector plummets in ongoing Fiscal

CIL (Coal India Ltd) and SCCL (Singareni Collieries Company Limited) which are two major coal suppliers in India have recorded a plunge in its coal supplies to the domestic power sector during first eight months (Apr-Nov'19) of ongoing fiscal year 2019-20.

According to CIL data, the miner supplied about 291.4 MnT to the power sector during Apr-Nov'19 against 320 MnT in the corresponding period of previous fiscal, thus registering a decline of 8.9% y-o-y basis. In the month of November this year, the fuel supply to power sector by CIL stood at 38.8 MnT against 43.1 MnT in Nov'18.

Coal dispatch by state-owned Singareni Collieries Company Limited (SCCL) also dropped marginally by 1.7% to 34.4 MnT in the April-November period of the ongoing fiscal, against 35 MT in the year-ago period. In terms of production also, CIL have recorded a plunge of 7.7% y-o-y basis during Apr-Nov period as the same has been recorded at 330.4 MnT against 358.3 MnT in the same period last fiscal.

Factors behind the decline

The amount of the fuel consumed by India's power generators, most of them coal-fired, during the ongoing financial year has fallen for the first time in over a decade. The reason for this decline is a combination of factors, including the rise in electricity generation from other sources (nuclear and hydro) and the overall slowdown in the country's economy.

According to the reports, this season's monsoon rains in India have been the heaviest in 25 years. As a result, hydro projects generated about 96 terawatt-hours (TWh) of electricity in the first half of this financial year, 9.8% more than what the central electricity authority (CEA), the government's planning arm on electricity systems, had estimated earlier. In the same period, nuclear power stations generated 24 TWh of electricity, 11.45% more than the CEA's estimates. India's nuclear plants are running at 80.7% of their overall capacity, an improvement of nearly 20% over last year when two nuclear plants have been under maintenance for around four months.

Moreover, India's ongoing economic slowdown has also hit power demand, which may have otherwise absorbed the rise in hydro and nuclear generation. The slowdown in the economy has also impacted coal demand from India's steel plants, the second biggest consumers of the fuel in the country which are facing a deceleration in production growth.