Coal Import Rush Leads to Port Congestion

New Delhi/Bhubaneswar: India's power and steel companies are importing shiploads of coal due to a severe shortage at home, leading to heavy congestion in one of the country's busiest ports that now has twice the number of vessels waiting than its available berths.

The over-crowding at Paradip port in Odisha could derail India's efforts to prevent a shutdown of more than half of its power plants which are running on stocks of less than a week in the worst deficit since a massive blackout in 2012.

While Power and Coal Minister Piyush Goyal has urged power firms to bring more coal into India - already the world's No. 3 importer of the fuel, the country's ports are finding it difficult to deal with the swelling traffic.

"We're 100 per cent houseful," said G.P Biswal, deputy conservator of Paradip port. "We're not able to cope with the sudden increase in traffic."

Half of the 27 stranded ships at Paradip are carrying up to 90,000 tonnes of coal each and it takes up to six days to offload a ship once it is berthed. Mr Biswal said rains in the eastern part of the country over the past few days have hampered operations but there could be an improvement in a week.

Some of the ships are to deliver coal for top power and steel firms like Jindal Steel and Power Ltd, Steel Authority of India Ltd, GMR Energy, Tata group and the Adani group - run by billionaire Gautam Adani.

Congestion was higher-than-usual at some other ports too, said Prakash Duvvuri, research head at research firm OreTeam.

Total coal traffic across all ports, including shipments within the country, rose 12 per cent in August from a year ago. Paradip port, the biggest state-owned port by capacity, handled 16 per cent more coal over the period, according to the Indian Ports Association.

India's coal imports have gathered steam after the Supreme Court ruled last month that the country's decades-old method of allocating coal mining concessions was illegal and arbitrary, posing threat to 218 blocks handed out since 1993.

The blocks include about 40 that are producing coal, estimated to have a capacity of about 9 per cent of the 566 million tonnes India produced last year. The court has yet to pass an order on whether to cancel the blocks.

"The court order, which is anxiously awaited, could be one of the prime reasons for the rising imports because the miners may either be feeling that the judgment may further be postponed or the judgment may not favour them," said OreTeam's Duvvuri.

India is home to the world's fifth-largest coal reserve but still needs to resort to imports in a big way as state-owned Coal India, which accounts for about 80 per cent of the country's output, frequently falls short of its output target.

India's overseas purchases of thermal coal, used in power generation, are expected to surge 11 per cent to 150 million tonnes this fiscal year, online market operator mjunction said.

Strong demand and the port congestion will help boost charter rates for ships, said Ian Claxton, managing director of Thailand dry cargo ship operator Thoresen & Co (Bangkok).

Copyright: Thomson Reuters 2014