India lockdown complicates CIL growth plans: Correction

Coal stocks at state-controlled producer Coal India (CIL) are expected to rise further amid a 21-day lockdown in the country to curb the coronavirus outbreak, which could weigh on the company's future production plans.

Operations are continuing at CIL's mines after the coal ministry said that coal falls under essential services and its production, supply and distribution should not be restricted.

India's lockdown started at midnight local time (18:30 GMT) and lasts until 14 April. Several coal-consuming industries such as [cement manufacturers](https://direct.argusmedia.com/newsandanalysis/article/2089450] and sponge iron firms are already facing closures as India intensifies its efforts to contain the coronavirus outbreak.

CIL's stocks were at 62.31mn t as of yesterday, according to coal ministry data, compared with 47.68mn t on the same day a year earlier.

Indian power plants had total inventories of 41.82mn t as of 23 March, with several utilities refusing to take more coal.

But CIL is aiming to continue boosting production to bridge the gap between its target for the current 2019-20 fiscal year ending 31 March and actual production, after its output was hit by heavy rainfall for several months last year. The company has already set an ambitious target of producing 710mn t of coal in 2020-21.

Coal-fired electricity generation in India dropped by 5.7pc between 1-18 March compared with a year earlier, according to the latest data from the Central Electricity Authority. More than half of India's electricity generation capacity is derived from coal.

Coal use is set to fall further in the coming days, with several factories and manufacturing hubs under lockdown, although rising temperatures from April should raise household electricity consumption.

The lockdown could weigh on power output at 13 imported coal-based plants that constitute roughly about a tenth of India's coal-generation capacity as port operations take a hit.

Several Indian ports have declared force majeure, including Mundra on the west coast and Krishnapatnam on the east coast. India's shipping ministry has asked key ports — including Kandla, Mumbai, JNPT, Mangalore, Goa, Kochi, Tuticorin, Chennai, Kakinada, Kolkata and Haldia — to consider similar declarations.

The ports are not completely shut down as they are classified as essential services but they are operating below normal levels amid reduced manpower and transportation constraints. This could weigh on India's coal imports, which rose for a fourth consecutive month in February, according to shipbroker Interocean.

By Saurabh Chaturvedi

source: Argus Media