Indian paper mills association warns of shutdowns over coal shortage
The Indian Paper Manufacturers Association has asked the Prime Minister to intervene after domestic coal costs rose more than 50% in two months amid irregular railway rake supply, warning some mills may have to suspend production on commercial grounds. IPMA wants priority coal and rake allocation for pulp and paper captive power plants, on a par with thermal power stations, and assured delivery of at least 75% of coal volumes under existing fuel supply agreements.
Why this mattersEnergy is 15-20% of Indian paper production cost, so a sustained coal squeeze threatens mill margins and output just as imports intensify competition.
- Coal costs for Indian paper mills have risen over 50% in the past two months, per IPMA.
- Energy accounts for around 15-20% of total paper production cost in India.
- IPMA wants captive power plants at pulp and paper mills given coal and rail-rake priority equal to thermal power plants.
- The association is asking for regular supply of at least 75% of coal volumes covered under Fuel Supply Agreements or linkages.
- Mills are reportedly being forced to buy coal via imports or open-market auctions at higher prices due to inadequate FSA allocations and rake shortages.
- IPMA president Pawan Agarwal said manufacturers face mounting margin pressure with limited ability to pass on higher fuel costs.
Sources
thehindubusinessline.com