The development comes at a time when Coal India Ltd (CIL) is beset with tepid demand for coal, with most of its customers, like the power sector, shying away from lifting adequate quantities.
The supply of coal by CIL to the power sector in April-May, 2018-19 was at 81.29MT, according to recent government data.
Last month, the supply of the dry fuel was at 30.15MT, a decline of 25.3 percent from the year-ago period, the data showed.
Singareni Collieries Company Ltd (SCCL), a state-owned coal miner, supplied 5MT of coal in April-May to the power sector, registering a drop of 46.7 percent over 9.40MT supplied by the PSU in the year-ago period, the data said. In May, SCCL's dispatch to the power sector dropped to 2.15MT, against 4.73MT in the year-ago same period, it said.
CIL is primarily tapping domestic coal-based power plants and non-power sector consumers which are importing coal. They imported around 150MT of the dry fuel in 2019-20.
The PSU is looking to substitute their supplies with domestic coal. The move would result in curtailing forex outgo arising out of coal imports and help CIL expand its supply volumes.
The power sector, which accounts for close to 80 percent of CIL's total supplies, is brimming over with nearly 50MT of coal stock, sufficient for 29 days of consumption, as at May-end according to the reports published in moneycontrol.com.
Many plants have started restricting supplies from CIL further, shrinking coal despatches.
To find avenues for expanding its supplies, CIL is focusing on non-power sector consumers like sponge iron, cement, fertilisers and steel companies, persuading them to replace their imported coal with domestic supply.Dialogue is underway with customers who opted for import substitution of coal in 2019-20.
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