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SCCL has a tough task ahead
In the wake of growing decline of crude oil prices in the international market, the State-owned Singareni Collieries Company Limited (SCCL) is likely to face a Herculean task of finding consumers for its produce in the near future. Since 2010 to mid-2014, world crude oil prices have been reasonably stable at around $110 a barrel.
DECLINE IN CRUDE OIL PRICES
Khammam: In the wake of growing decline of crude oil prices in the international market, the State-owned Singareni Collieries Company Limited (SCCL) is likely to face a Herculean task of finding consumers for its produce in the near future. Since 2010 to mid-2014, world crude oil prices have been reasonably stable at around $110 a barrel. However, the oil prices have come down to more than half since the second half of 2014.
Now it totters around $60 a barrel. With supplies keep coming, the market analysts say that there is a global oversupply of nearly two million barrels a day. Although the Indian power and metal producers using imported coal have reason to smile with coal prices coming down significantly, the situation is likely to affect the business prospects of the SCCL.
Since 2011, while Coal India’s prices remained stable, the international price of coal has come down significantly. Further it went down following a constant dip in oil prices in the recent past. Now the imported coal (best grade) is priced at Rs 4,200 per tonne as against the Coal India’s Rs 4,700. Moreover, the quality of the locally produced coal is slightly inferior to the imported one. It may be mentioned here that all these years Coal India has been pricing its produce at a significant discount compared to international prices of coal. But now the situation is totally changed.
As a result, the SCCL may have to find a consumer to its produce in the near future if the price gap is widened further. With fuel supply agreements in place, the SCCL is able to supply 80 per cent of its produce to NTPC, KTPS and other thermal power projects.
Besides, these projects are situated long way away from ports geographically. So it became imminent for them to buy coal from the SCCL even at a higher cost. Admitting the stiff contest between the local and imported coal price, the SCCL director (E&M) P Ramesh Babu on Saturday said that the company had gained nothing during the last fiscal year. “All that income it had accrued was due to the fixed deposits in the banks,” he said, asking the employees to augment the production with minimum expenditure to help the company grow.
By:A Mahender
