Govt may bail out Nalco to avert refinery closure

The Centre may bail out National Aluminium Company (Nalco), whose 1.6 million tonne alumina refinery in Orissa is on the verge of closure due to acute shortage of coal. The Union Coal Ministry is understood to have decided to ask Mahanadi Coalfield (MCL) to supply coal to the alumina unit so that Nalco gets over the problem. The Coal Ministry’s move follows the discussion that Nalco Chairman and Managing Director (CMD) C R Pradhan had with top government officials in New Delhi in the last two days. The ministry had on July 21 asked MCL to supply all its coal to power utilities in south India. This move resulted in drying up supply of the fuel to the Nalco unit, thereby precipitating the crisis. On an average, MCL was dispatching 25 rakes (1 rake=3,500 tonnes) of coal daily to the power utilities in south following the July 21 order. However, in its latest order, the ministry has asked MCL to dedicate 21 rakes of coal to southern power utilities and distribute the rest among other industries, including Nalco. One rake of coal from Talcher Coalfields of MCL has left for the Nalco refinery at Damanjodi in south Orissa. The consignment is expected to reach there tomorrow. Similarly, another rake carrying e-auction coal from Deepika Colliery at Korba in Chhattisgarh is expected to reach Damanjodi tonight. These two rakes will boost the Nalco unit’s stock by about 7,000 tonnes. According to the Nalco CMD, the refinery, at its present reduced level of operation (the company has halved its daily output from 4,500 tonnes to 2,000 tonnes), needs about 1,000 tonnes of coal every day. So, the two rakes will be barely enough to run the unit for seven days. He, however, pointed out that efforts are on to line up more rakes to boost coal supply to the unit. The company is mainly working on three sources of supply to wriggle out of the situation. These are improving coal supply from the linked mines of MCL, securing more rakes from the Railways to haul e-auction coal from mines in Chhattisgarh and Orissa and using imported coal to cut dependence on MCL. “There is a constraint on using more of imported coal as it can only be used in blended form in which the share of the imported coal cannot be more than 10 per cent…,” Pradhan said. So, the company can replace only 10 per cent of its requirements with imported coal, the Nalco CMD added. Source: Business standard