State-run miner Coal India Ltd scaled up its capex to Rs 3,034 crore for the first quarter of 2022-23, higher by 65 percent over a year back, driven by the government's push to expand capacity as the country faced yet another power crisis around the same time, the company said in a statement.
The near-monopoly PSU has been under pressure to increase production as coal supplies dwindled at power plants even as demand for electricity hit all-time highs driven by a spike in household expenditure amid an ongoing heat wave and a pick-up in industrial demand, forcing many states to resort to power cuts in March-April.
Power generators have been facing a recurring problem where they are left scrambling for fuel as Coal India’s output remains constrained and the supply infrastructure faces bottlenecks.
“CIL’s production tempo is keeping up a consistent double-digit growth in FY23 so far and all efforts are on to continue the trend. What assumes importance is to have a matching evacuation infrastructure that can handle transportation of the increased output,” a Coal India spokesperson said in the statement.
CIL produced 159.8 million tonnes (MTs) of coal in the quarter ended June, clocking a historic growth of 29 percent on-year from 124 MT. Typically, Coal India’s capex and production growth are back-ended in a fiscal year, but the company has been working on both aspects since the beginning of the current fiscal to avoid a shortage going ahead as mining activity gets disrupted due to rains.
Coal India aims to achieve output of 700 MT in FY23. The company’s production shrank for two years before it reported a modest 4.4 percent growth in FY22 production at 622.6 MTs.
“The capex increase came on the back of a strong spending in acquiring land and strengthening transport infrastructure in our coalfields under first mile connectivity projects. These two vital areas help CIL in expanding its mining operations for accelerated production and pairing it with seamless transportation of coal,” said a senior official of the company.
Nearly one-fifth capex in the June quarter, amounting to Rs 608 crore, was for land acquisition. The expenditure was spread across all the subsidiaries of CIL.
Capex under First Mile Connectivity (FMC) projects, on construction of coal handling plants, silos including weighbridges totalled to Rs 577 crore in the quarter, reporting a four-fold increase from the same period a year ago.
Capex on rail sidings and laying of rail corridors was Rs 571 crore during Q1 FY23, up 57 percent on-year. The company said that the evacuation logistics projects saw capex of Rs 1,148 crore.
The capex also included Rs 518 crore on joint ventures, Hindustan Urvarak Rasayan Limited and Talcher Fertilizers Limited.
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