Coal India Ltd., a state-owned miner, has warned that if prices do not rise, the output of the fuel would plummet, posing significant challenges to the country’s energy supply.
The world’s biggest coal miner is experiencing cost challenges from expected wage increases as well as increasing diesel costs for mine equipment. On a conference call with analysts, Chairman Pramod Agrawal stated that some of the company’s subsidiaries are finding it “difficult to survive without a price hike.”
Raising coal prices as part of long-term supply contracts would need the government’s approval, as it considers the impact of rising interest rates on the country’s inflation and the overall economy.
Agrawal’s remark comes as the government continues to put pressure on Coal India to keep supplies of the fossil fuel, on which the country depends for around 70% of its electrical output. Coal stockpiles at power plants plummeted late last year as mine productivity declined, resulting in power disruptions and supply restrictions.
While coal stockpiles at power plants have increased from a low in September, they remain just about one-third of an April 2020 high, and electricity consumption will climb as India approaches summer. “Price hike should take place immediately, it has become very urgent for Coal India,” Agrawal said on the Thursday call. “Otherwise, coal production in the country will suffer.”
Coal India intends to deliver 670 million tonnes in the financial year ending March, a nearly 17 percent increase over the previous year. The corporation has set a shipping and production target of 700 million tonnes for the next 12 months.
Other businesses are complaining about supply shortages as attempts to replenish inventories for energy producers are a priority. As per the Aluminium Association of India, coal stockpiles at power plants used by aluminium companies are at three to four days on average, down from a usual level of 15 days.
