October 7, 2019 / 9:43 AM / 12 days ago

UPDATE 1-India's annual thermal coal imports seen topping 200 mln T - Moody's unit

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NEW DELHI, Oct 7 (Reuters) - India’s ICRA Ltd, a unit of Moody’s Investors Service Co, said on Monday it expects the energy hungry nation’s thermal coal imports to be more than 200 million tonnes in 2019/20, due to lower-than-expected production by state-run Coal India Ltd.

ICRA said it expects Coal India, which has missed annual production targets over the last few years, to fall short of its 2019/20 production forecast of 660 million tonnes by up to 75 million tonnes.

India’s thermal coal imports rose 13.7% to 183.4 million tonnes during the year ended March 2019, according to government data.

Coal India’s output for the six months ended September 2019 has fallen 6%, mainly due to the highest monsoon rainfall in 25 years and strikes by its workers over issues ranging from mine safety to the privatisation of the company.

A senior Coal India official told Reuters on Friday the company expects to meet production targets by ramping up output at mines not adversely affected by heavy rainfall.

ICRA said the annual target looks unlikely.

“In order to achieve the targeted annual coal production or come anywhere close ... CIL would have to step-up to an average run-rate of 2.3 million tonnes coal production per day,” ICRA said in a statement on Monday.

“Fully recovering the lost ground during the second half would be extremely challenging.”

Coal accounts for about 75% of India’s power generation.

It has been looking to reduce coal shipments to cut its import bill, with coal featuring in the top five commodities imported by India by value.

However, the government has failed so far to open the industry to competition, despite passing a liberalisation policy 19 months ago.

About 50% of India’s utilities had coal stocks for a week or less at Sept-end, according to data from the Central Electricity Authority. Indian utilities are encouraged to have stock sufficient to run plants for over two weeks.

Jayanta Roy, senior vice-president at ICRA, said Coal India’s “ability to quickly ramp up production would remain crucial to avoid a repeat of the acute coal shortage that surfaced during the second half of FY2018.” (Reporting by Sudarshan Varadhan; Editing by Louise Heavens & Kim Coghill)

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