Production target makes Coal India stakeholders anxious

Coal India limited (CIL) contributes more than 80% of coal production in India. It is one of the Public Sector Units in India which is into coal mining and refinery. For the financial year 2020-21, CIL was said to produce 710 million tonnes of coal by the coal minister Pralhad Joshi. The COVID-19 pandemic changed the entire scenario. Joshi added that the coal sector was also adversely affected, leading to ample fuel stock and low demand by the power and energy sector. The situation didn’t influence the government to bring down its target of producing 710 million tonne coal. It will help to achieve the goal of producing 1 billion tonne by the year 2023-24.

As on March 31, CIL had a stock of 74 MT. They are required to achieve the target because the government believes that the demand of the energy sector will rise in a few days. Furthermore, there will be low production in the monsoon season. Hence the maximum production will happen at this time, said an official to the media. The CIL stakeholders said that they already have a pile of stock for 30 days. If it produces 710 MT in the financial year 2020-21, it will lead to more pile up of stock, theft, poor quality and environmental pollution. It will further increase the chances of fire break up in the industry.

Production target makes CIL stakeholders anxious

The demand for the coal sector would increase after the lock down phase as mentioned by the Union Coal Minister. The minister of railways Mr. Piyush Goyal overlooks India’s opportunity to be a manufacturing hub. By acknowledging both the statements, the shareholders said these things would occur after a gestation period. Even before the pandemic, the situation was not favorable for the power sector due to low demand.

The coal ministry could have kept realistic targets which may help in keeping the coals at exposed seams. As per the demand, the coal could be extracted from the seams. This would lead to increase in the the cost per ton and decrease in the output per man per shift, said the ministry sources.

The shareholders had a counter statement that the coal productions maximum costs is Rs 1,800 per tonne. The wages and salaries paid to the workers constitutes almost half of the operational cost. An increase in the production target would lead to increase in the compensation paid to the workers of the company. The maximum possible stock which can be produced by CIL is 650 MT if the stock pile up of 125 MT is excluded. Any increase in the production will not be feasible as per the shareholders. Meanwhile, CIL has also taken measures to reduce the operational costs by shifting all of its subsidiary marketing counters from cities to subsidiary headquarters. The CIL officials thought that there are chances for a reduced production target for the financial year 2020-21.

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