New Delhi: A persistent mismatch in the demand and supply of coal, which has impacted the supplies of the fuel to the entire non-power sector in India, has pushed state-run RINL (Rashtriya Ispat Nigam Ltd) to float its first-ever tender for boiler coal. B Ganga Rao, president of RINL steel plant employees' union, who spoke to PSU Watch on Friday, said that the coal shortage situation is so dire that it has led the PSU to float its first-ever global tenders for boiler coal. "The company will have to procure boiler coal at costs four times higher than the prices offered by state-run companies, with which RINL has fuel supply agreements," said Rao.
This, in turn, is bound to inflate the cost of production and impact the finances of RINL adversely. RINL's finances have already been in the red and the government has plans to privatise the company.
India has been reeling under a shortage of coal for the past several months as international coal prices have touched record highs of USD 400/tonne and domestic production of coal has not been able to meet the growth in demand. Since the demand for power has seen an unprecedented rise, the government is prioritising coal supplies to the power sector, leaving the non-power sector in the lurch. With domestic coal supplies curtailed, non-power sectors like cement, steel, iron, aluminium, paper have been left with no option but to import expensive coal.
"Rashtriya Ispat Nigam Limited (RINL), Visakhapatnam Steel Plant, invites tenders for supply of 150,000 MT of `Boiler Coal (Imported)' in Three (3) shipments each of parcel size 50,000 MT," a tender document said.
RINL requires two kinds of coal for its operations: boiler coal and coking coal. While the demand for coking coal is met through imports, RINL has been getting boiler coal from Coal India subsidiary Mahanadi Coalfields Ltd (MCL) and Singareni Collieries Company Ltd (SCCL). "We have a requirement of 80 MT of boiler coal every month for operating the blast furnaces. But we have been receiving only 32-35 MT of coal every month from domestic coal companies. Initially, we were meeting the shortfall through coal purchases from domestic private players. But this is the first time when RINL has floated a global tender for boiler coal," Rao told PSU Watch.
The dire situation has angered RINL employees who also held a protest on July 12 to demand sufficient coal supply for RINL. Staging a protest at GVMC Gandhi statue in Vishakhapatnam, they demanded Andhra Pradesh's Chief Minister YS Jagan Mohan Reddy to intervene in the matter and put pressure on the Central government to ensure coal supplies. They pointed out that there is a high risk of disruption of production in Visakhapatnam Steel Plant (VSP) due to shortage of coal.
"Importing expensive coal from overseas will inflate the cost of production for RINL to Rs 60,000/tonne. The cost of production last year was Rs 52,000/tonne," said Rao.
The situation has also caught the attention of Vishakhapatnam MP MVV Satyanarayana, who has written a letter to Railways Minister Ashwini Vaishnaw, requesting him to allocate more coal wagons from MCL to RINL. "… the association has brought to my notice that RINL/Vizag Steel one of the best integrated steel PSU, has been suffering due to lack of captive Iron & Coal Mines. In recent post COVID situation, imported coking coal price hiked more than 400% which led to curtailing of production since past 8 months. RINL has own thermal power plant (315MW) to meet uninterrupted electricity requirement for all major units. Out of 315 MW, around 100 MW power is required to meet BF Turbo Blowers and steam production. Generally RINL used to maintain 15-day stock of boiler coal 45 to 50 thousand tones for smooth operation and left with zero stock or one day stock since past four months," the MP has told Vaishnaw in the letter dated July 11.
He has also claimed that despite having fuel supply agreements with MCL, RINL did not receive a single coal rake in June. Coal shortage has caused RINL to produce steel less than 50 percent of its rated capacity. which is leading to heavy losses, Satyanarayana has said in the letter.
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