The government has mandated state-owned Coal India Limited to replace at least 100 million tonnes of imports in the current fiscal cycle with domestically produced coal. The development comes at a time when, on the one hand, the country has a surplus of domestic coal, while, on the other, demand for the dry fuel is slumping.
An official said, “Coal India Limited (CIL) has a mandate of replacing at least 100 million tonnes of imported coal with domestic non-coking coal in the financial year 2020-21.”
Coal India Limited is connecting to unregulated sectors such as sponge iron, cement, aluminum for domestic coal in its bid to substitute imports with domestic coal, the official said. In addition, the PSU also eliminated several additional costs and the reserve price to zero, the official added.
In 2019-20, the country imported 247.1 million tonnes of coal, about 5 percent higher than 235.35 million tonnes imported during 2018-19.
Previously, Pralhad Joshi Coal Minister had written to state chief ministers asking them not to import the dry fuel and take the domestic supply from Coal India Limited, which has an abundance of fossil fuel.
Because of the lockdown, the power sector, a crucial user of coal, is struggling with weak demand and plants run at lower capacity, reducing demand for coal.
The government has announced a series of initiatives such as increased supply for linkage customers to raise demand for coal. It also announced several relief measures, for Coal India Limited consumers including the power sector.
The Public Sector Unit closed the financial year 2019-20 with coal production of 602.14 million tonnes, against the target of 660 million tonnes. It is targeting 710 million tonnes of coal output in the current financial year.