Coal India's output target revised to to 908 mt by 2020 as mine and non-mine projects get delayed due to issues relating to land acquisition, rehabilitation, forest and environmental clearances and railway connectivity
The much hyped 1 billion tonne production target for Coal India (CIL) announced by Union coal minister Piyush Goyal, may have been given a quiet burial. CIL has admitted that it can reach up to only 908 mt, a good 100 million less than what has been touted by the ministry since May grabbing the fancy of power producers as well as investors.
Goyal's routine statement in the Lok Sabha that CIL would be investing Rs 62,590 crore to take its production to 908 mt is a sly admission that the 1 billion target may well get missed. "Coal India has prepared a roadmap for achieving a coal production level of about 908 mt in 2019-20 from the current level of production of 494.23 mt," coal and power minister Piyush Goyal said in a written reply to Lok Sabha last week.
CIL officials admitted that it is yet to identify projects that can take care of the rest of the target.
"The 908.10 mt is from identified projects, while for the rest the projects are yet to be identified," an official said.
Coal India Chairman Sutirtha Bhattacharya refused to comment on the development citing 'silent period' prior to announcement of first quarterly earnings.
What's more, CIL has also revised downwards the production target for 2016-17, the terminal year of the 12th Plan period from earlier envisaged 615 mt to 597.60 mt. But why the ministry as well as CIL had to revise its targets that could result in much embarrassment? CIL has about 124 coal projects and 27 non-mining projects at different stages of implementations.
But out of these 124 planned coal mines, 82 have now got delayed while out of the non-mining projects, 13 are running behind schedule.
The delays for mine and non-mine projects are mainly due to issues relating to land acquisition, rehabilitation, forest and environmental clearances and railway connectivity. The yearly target for the current 2015-16, however, has been kept unchanged at 550 mt, translating into a production growth of 11%. In contrast, the target of 908.10 mt for 2019-20 indicates a CAGR of 12.98%. For 2015-16, a capex plan for Rs 5,990.50 crore for mining projects and another Rs 4,150 crore for infrastructure projects.
Another twist in the tale: CIL wouldn't be investing anywhere close to $25 billion, or about Rs 1.27 lakh crore, that Goyal said the company would be investing to achieve its target. For a lesser target of 908 mt, the investment has been significantly scaled downed to just Rs 13,900 crore, according to Goyal's written reply to the Lok Sabha on Thursday. It is not, however, clear whether Goyal talked about investment only in developing the mines but also in the equally important task of boosting transportation related infrastructure, including new railway networks.
Nonetheless, CIL's scaling down on its production as well as investment targets wouldn't be music to the ears of global equipment suppliers, many of whom has been waiting for orders to flow from the Indian mining behemoth in times of global slowdown in investment in new mines.
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