New Delhi: Coal India Ltd (CIL) will continue to be a dominant player in the coal sector even as it faces competition from private players, said Chairman Pramod Agrawal. Speaking during a panel discussion at the National Coal Conclave & Exhibition on October 17, Agrawal said that competition from private players and the formation of a coal exchange will help Coal India in realising better prices for coal, improving its profitability rather than denting it.
"When private players come, their production cost will definitely be higher than Coal India. And that will fix the market price. So, 90 percent of the coal will go at a much higher price than the current price. And that will increase the profitability for Coal India. So, I am not worried about any competition," said Agrawal.
Despite an unprecedented rise in international coal prices, Coal India has been selling coal to consumers under long-term fuel supply agreements at the same price for the last four years. While the Coal India Chairman has spoken about the need to increase coal prices on several occasions, the fuel crisis situation precipitated by an unprecedented rise in India's power demand over the last two years has dissuaded the public sector company from walking the talk. Coal India supplies 80 percent of the coal required by the power sector.
"We make profit only on 10 percent of coal production. And around 80 percent of our coal supplies, which go to the power sector, are not profitable for us. And we have still managed to stay profitable without increasing coal prices," said Agrawal. He, however, added that he will reach out to all the stakeholders once again to create a consensus on the necessity to raise coal prices.
"We will complement the private sector in meeting India's energy needs. There's a potential for increasing the production of coal by 150 MT today. All the thermal coal that is being imported can be replaced by Indian coal. And that is a challenge and an opportunity for both Coal India and the private players," said Agrawal.
"In the next 2-3 years, there will be abundance of coal in the country, meaning the shortage type situation that India has been facing for the last two years will no longer be there. If Coal India and captive miners increase the coal production, there will be abundant coal," he added.
Commenting on the same, former Coal India Chairman and current Jindal Power chief AK Jha said, "No one can challenge the monopoly of Coal India in the time to come when it comes to production and despatch. But it will have to face the heat of competition in the next five years."
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