Historical growth in coal production: Govt

Historical growth in coal production: Govt

The coal production, which was 382.62 million tons (MT) in 2004-05, has grown to 893.19 MT in 2022-23 and is all set to touch 1000-MT mark in the year 2023-24, the government claimed on Monday.

The overall annual coal production has surged from 565.77 MT in FY 2013-14 to 893.19 MT in FY 2022-23, witnessing a massive growth of 57.87 per cent over the last ten years.

The Compound annual growth rate (CAGR) of coal production from 2008-09 to 2013-14 was 2.8 per cent. Had this trend continued, the coal production in 2022-23 would have been only 725.39 MT.

”With the continuous proactive initiatives of the government, the CAGR has been at a 5.20 per cent high with the production in 2022-23 being 893.19 MT. This jump in production of 167.80 MT (savings of approx. of Rs 2.71 Lakh crore) has helped in reduction of coal import, which the country would have been compelled to import had the CAGR remained at the meagre 2.8 per cent as was the scenario prior to 2014,” the Ministry of Coal said.

India meets most of its coal needs through domestic production and supply. Notably, Coal India Limited (CIL) plays a dominant role, contributing over 80 per cent of the country’s indigenous coal production and supply. Under the current system, public sector coal companies, including CIL, supply coal to the power sector at notified prices.

There has been no increase in notified price by the CIL since 2018. The recent price revision was done by the CIL in May 2022, in which the company has hiked only the notified prices for high grade coal of Grade G2 to G10 by 8 per cent to increase production of high grade coal & reduce the dependence on imports, and this marginal increase in price will effect less than 28 per cent dispatches of CIL and incremental revenue will be only about 3.37 per cent.

In FY 2022-23, CIL’s Average Fuel Supply Agreement (FSA) price was around Rs 1450/- per tonne, a 3.37 per cent increase in the overall FSA Pricing translates to increase in average FSA rates by only around Rs 48/- per tonne. Rs 100 increase in coal prices translates to an increase in power tariff by about 6 paisa per unit, with the above marginal increase in coal prices the possible increase in tariff will be less than 3 paisa per unit.

Further, the Royalty rates on coal produced in all states has remained unchanged since 2012 thereby maintaining a stable price of notified price of coal and at the same time the state finances improved with royalty collection commensurate with the enhanced coal production.