The Indian coal industry has been witnessing a sluggish
operation of it resources over the past 3 years. The imports has gone up in a
noticeable level of up to 90 mT last year and is estimated to grow at around
220 mT this year. The central government has noted the issue and has framed its
first set of action to avert the booming issue in the sector.
The first step being the conduction of a special e auction over
the reserves which are not actually operating at their promised utilization
factor. Now this encouraged the private firms especially the Power producing
firms to try out their hand with the coal mines since their PPAs are not very
comfortable. The price of the auction will go up but the net captive price of
the coal will come down.
In addition to this the Coal India Limited will also face a
warning since the government may increase the number of mines being leased in
the future. This inturn now increases the internal competition. Coal India
Limited has already geared up to face this new challenge by giving their
employees a pleasing bonus for the Diwali festival. The work force plays a key
role in the coal industry, as we know that they are hard to find for this
industry to the medical impacts. The people in Eastern part of India will be
benefited because of the huge man power available at a lower cost.
The mines auctioned are in need
of resurrection. Hence the government will look forward to a limited amount of
import for the next two years which would thereby aide in India’s Economic
growth. With china devaluation its yuan it is set to become a net exporter of
coal and it prices are also expected to drop down. The current rice of the coal
53.5$ per ton is standing as the lowest over the past decade and further drop
down of the price will come in handy for Indian import.
When the Private firms
step in we can expect them to take a dig in the operation and
transportation cost. In addition to this they are likely to attract more
foreign investments. The government may not grant complete commercialization
over the mines but they may give segmented leasing like in the case of Energy
sector where the generation of electricity is done by the government while
distribution is done by private firms on contract basis. Leasing out in terms
of departments will also ensure that commercial utilization of the resource is
not done and also to ensure increasing production every year as proposed. Hence the investments may not come directly
but they will flow in particular departments of the Coal mine operation.
The need for coal is set to increase tremendously over the next
10 years since the government has initiated a lot of power producing projects.
The Indian Coal industry has fourth largest coal reserves in the world and the
quality of the coal is good containing low calorific value. With the import
markets too playing a helping hand with the fall in prices, the government is
in a position to take a decision that will benefit the country in a long run.
Authors:
Praveen Kumar.C 15AC34
Laxmi Priya.S 15AC23
Lakshmanan.R 15AC22
Authors:
Praveen Kumar.C 15AC34
Laxmi Priya.S 15AC23
Lakshmanan.R 15AC22
