KOLKATA (miningweekly.com) - The Indian government has turned down a proposal from Coal India Limited (CIL) to lower its production target from 458-million tons to 440-million tons during 2011/12.

CIL, the world’s largest coal miner, had sought government approval for a lower production target after the company recorded extraction of 150-million ton of coal during April 2011 to September 2011, which was 20-million ton lower than the pro rata target for the same period. However, the Indian government has refused official sanction for lower production fearing the crippling impact on thermal power generation, already suffering from acute shortage of coal supplies.

“The coal company has claimed that production had suffered during the last nine months because of heavy monsoon rains in the coal-mining geographies,” said a Coal Ministry official.

“However, we believe that not only could production be stabilized over the next two to three months but also increased since weather conditions have improved in all mining areas of CIL,” the official said.

In a review released on Monday by the Central Electricity Authority, the Indian electricity regulator, coinciding with the period of lower production of the majority government-owned CIL, electricity generation by coal-based power plants in the country was 4 607-million units lower than the target.

“We expect the shortfall in thermal power generation as a result of short supply of coal to continue for the next several months. The situation could only improve if CIL was able to increase production substantially over the official production target set by the Coal Ministry,” a Power Ministry official said.

The Indian coal shortage has reached such a crisis stage that Prime Minister Manmohan Singh was expected to convene a meeting of the Planning Commission and the Power, Coal and Finance Ministries, within the next fortnight to take stock and explore short- and medium-term solutions, the official said.

As a precursor to the meeting, Coal Minister Sriprakash Jaiswal and Junior Coal Minister Pratik Prakashbabu Patil were touring coal mines across the country, particularly the monsoon-prone ones in the eastern Indian province of Orissa.

A team of senior officials of the Coal, Railways and Power Ministries have been rushed to several coal mines owned by CIL. The mandate of the team was to initiate emergency measures to immediately evacuate 55-million ton of coal stockpile lying idle at various locations because of the shortage of transport infrastructure.

As a further short-term measure, CIL has proposed that barring the power and fertiliser sectors, it should not be mandatory for the miner to sign fuel supply agreements (FSAs) with consumers in the steel, aluminium and cement sectors and the latter should buy through e-auctions conducted by the miner.

Currently, CIL offers 10% of its production to small consumers through e-auction and the company has suggested that it would be willing to increase this to 28% if FSA norms were relaxed and it were not binding on CIL to make assured long-term supplies to sectors other than power and fertilizer. CIL has 1 599 FSA agreements that make it mandatory for the company to supply 391-million tons of coal to the signatory consumers.

At the same time, the second-largest Indian coal miner, Singareni Collieries Company Limited (SCCL) has suffered a production loss of 4.5-million ton from the 35-day-long strike by its workers, which ended last week.

SCCL extracted an average of 54-million tons a year from its 14 opencast and 36 underground mines, spread across four districts of Telangana, in the southern Indian province of Andhra Pradesh. The company’s 67 000 odd workers were protesting in support of the ongoing agitation for a separate Telengana province to be carved out of Andhra Pradesh.