CIL's poor show reason for coal's demand-output mismatch: IEA

The International Energy Agency has said India's increasing mismatch between the domestic production and the demand for coal is due to many factors, including the "weak performance" of Coal India (CIL).

The country's coal demand is projected to touch a staggering 610 million tonne coal equivalent (Mtce) in 2016, compared to 434 Mtce last year, according to the International Energy Agency (IEA).

According to IEA, the increasing mismatch is caused by many factors, including the fact that CIL has not yet commissioned the additional mining capacity to meet the rising power and industrial demand.

"This is due to the company's weak performance as well as environmental and land use issues. Furthermore, some of the mining areas are densely populated and the expansion of surface mines Requires resettlements," IEA said in a report.

Earlier this month, Coal India said that it has lowered production target for 2011-12 fiscal to at least 440 million tonne from previous estimate of 452 million tonne.

The state-run entity had also missed its April-September target of 196 million tonne and managed a production of about 176 million tonne, which was mainly on account of inclement weather conditions.

India's coal demand is projected to be 491 Mtce next year and further rise to 543 Mtce in 2014.

Pointing out that India's coal production growth slowed in 2010, IEA has said the total production touched 538 million tonne.

Noting that China and India accounted for 90 per cent of the coal demand growth, IEA said India is world's third largest coal consumer, just behind China and the US.

"Due to domestic supply constraints and quality issues, Indian import demand is likely to grow rapidly over the medium-term," it added.

Going by the report, the Indian non-power coal demand is growing fastest at an annual rate of 6.2%.

"Non-power coal consumption increases from 123 Mtce in 2010 to 177 Mtce in 2016, reflecting tremendous growth rates in all major energy intensive industries especially cement, iron and steel as well as fertilisers," IEA said.

Globally, coal demand is expected to jump to 6,184 Mtce in 2016 from 5,225 Mtce last year.