CIL's production growth in 11th Plan to be second-lowest in three decades

Coal India Ltd (CIL), the world’s largest producer of coal, is set to register an average annual growth rate of 4.3 per cent during the current Five-Year Plan period, which ends in March 2012. This would be the second-lowest growth rate in the last seven Plan periods since the beginning of the Fifth Plan in 1974. The lowest production growth was registered in the ninth Plan when an unprecedented slowdown in industrial growth had pulled down the demand for coal.

Coal India’s production grew 5.1 per cent to 379.4 million tonne (mt) in 2007-08, the first year of the current Plan period. The output grew by 6.4 per cent to 403.7 mt in the second year and 6.8 per cent to 431.3 mt in the following year. Production remained flat in the fourth year (2010-11). For the current financial year, CIL has projected a production growth rate of 3.6 per cent to 447 mt, taking the projected average annual growth rate during the five-year period to 4.3 per cent.

The concerns on coal shortages and the impact on power production have led Prime Minister Manmohan Singh to call a high-level meeting on Wednesday to take stock of the deteriorating fuel supply situation. The meeting would be attended by Power Minister Sushilkumar Shinde, Coal Minister Sriprakash Jaiswal and Finance Minister Pranab Mukherjee, along with Planning Commission Deputy Chairman Montek Singh Ahluwalia.
 

PRODUCTION GROWTH
Plan Period	Prod in Terminal  Year (MT)	Average annual  growth rate over  the plan period (%)
5th Plan	90.00	5.20
6th Plan	130.80	6.40
7th Plan	178.60	6.40
8th Plan	250.60	5.00
9th Plan	279.60	2.20
10th Plan	360.90	5.40
11th Plan (projected)	447.00	4.37
12th Plan (projected)	556.00	4.46
Source: Coal India Ltd

The review meeting would focus on the progress made in the two sectors so far in the current Plan period and set a course-correction agenda for this year, according to a senior government official.

At a full meeting of the Planning Commission in April, Environment Minister Jairam Ramesh had called the 12th Plan’s target to have a 100,000-Mw power capacity “ecologically unsustainable”.

Coal accounts for over half of India’s commercial energy supply. Coal India is India’s monopoly coal producer and alone contributes over 80 per cent of domestic coal supply of 530 mt. About 70 per cent of its production goes for generating power and the rest is used in other key infrastructure sectors of steel, cement and fertilisers.

The coal shortage has already led the power ministry and the domestic power industry to demand a temporary stoppage of e-auction sales of coal to meet the demand of stranded power projects. With Jaiswal having opposed the idea, the matter is likely to come up for discussion in the meeting with the PM. According to the power ministry’s estimate, if coal supply is not ramped up immediately, 24,000 Mw power capacity would become stranded.

CIL blames environmental hurdles for the dip in production and limited availability of railway rakes for coal dispatch, which has led to over 70 mt of coal stocks piling up at its mines. The Planning Commission, the country’s apex policy advisory body, had recently warned that CIL might not be able to meet its production growth beyond the 12th Plan period if issues over green clearances for its projects were not cleared soon.

The environment ministry has classified the country’s forests as ‘Go’ and ‘No-Go’ areas, specifying regions where coal mining can be allowed only after getting stringent forest clearances.

Due to delays in getting environment and forest clearances, CIL’s production in the 11th Plan is likely to take a hit of 45.64 mt.