Coal crunch stares Odisha industries for straight second year

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Bhubaneswar: The Odisha based industries are in again for a tough year as there is no respite from coal crunch for the second straight year.

The situation remains critical for most of the captive power-based industries. Despite all efforts to draw attention to their plight last year, nothing has changed on the ground for them. It seems the people’s movement to secure raw material for Odisha based industries also not fallen on the right ears.

The industrial operation remains badly impacted with major power plants reporting less than 13 days of coal stock impacting inventories resulting in an uncertain atmosphere. With MCL (Mahanadi Coal Limited), reporting a continual shortfall in their monthly target achievement in the last eight months from April to November 2019 with a production decline of 12% by November 2019 compared to last year, it seems the woes of the Odisha industries are far from over.

While MCL has set a target of 160 million tonnes of coal production for this fiscal year, it is still grappling with serious production stoppages, intermittent shutdowns and stressed logistical infrastructures at its key operative mines. The overall scenario of coal production in the country too is not very encouraging. The largest coal producer, Coal India Limited (CIL) has reported a decline in production by 8% for April to November 2019 over corresponding period last year.

With such a bleak coal production scenario coupled with preferred treatment to the power sector over the non-power sector including Captive Power Plants that constitute the manufacturing backbone of Odisha, manufacturing setups are in for a serious coal crunch. With a total coal-based thermal capacity of 15,769 MW, Odisha requires 71 Million Tons Per Annum that is only 45% of the total production capacity of MCL, but state-based industries continue to suffer coal deficit.

It is worse for power-dependent industries as compared to power plants. Odisha’s power plants have an installed capacity of 6,850 MW, require 36 Million Tons of coal and get 85% of their requirement fulfilled. The 40+ Odisha based power-dependent industries supporting core manufacturing in the state for their total installed capacity of 8,919 MW that require 35 Million Tons per annum of coal, but get less than 50% to 60% of their requirement from Odisha coal sources. This leaves them to fend from other states involving high logistics costs or even leaving them exposed to vagaries of international coal import prices that hit the bottom line badly. On an average, captive power plant-based industries are getting less than 50 percent of the coal against secured linkages and annual contracted quantity.

Industrial sources have revealed that an additional allocation of 10% -15% of Odisha-produced coal to Odisha Industries will enable them not only to survive but has the potential of generating additional revenue of over Rs. 700 Crores for the state and additional revenue of almost Rs.900 Crores for Indian Railways annually. Despite all these low hanging fruits, in the absence of any concrete initiative to quickly address the current crisis on central and state government’s end, it seems coal crunch will hit industrial production in Odisha for the straight second year impacting the much talked about Make in Odisha and Make in India initiatives.

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