The supply of explosives can increase if the right price is offered: Pvt cos | Nagpur News
Nagpur: Power cuts attributed to shortage of coal, causing decline in availability of mining explosives. Private explosives makers are lobbying Coal India Limited (CIL) to allow them to escalate tariffs. A fair price will allow them to supply the entire contracted quantity. Supplies have been kept low at present due to soaring prices.
High levels of ammonium nitrate (AN) – the raw material for making commercial explosives – have made supply unsustainable at current rates, industry sources say.
The preparation for war in Ukraine led to a spiral in AN rates. Private companies insist that if CIL allows them to escalate rates to cover the rise, even they can bring supplies back to normal. At present, the companies have offered up to 60% to 90% of the contracted quantity, sources said, sharing a document presented during a meeting with the coal ministry.
Supplies are kept at a minimum level to prevent further losses. Due to the high rates of AN, the private actor suffers a loss of Rs4,000 to Rs6,000 per tonne of explosive supplied to CIL.
Recently, the management of Singareni Collieries Company – a non-CIL government company – agreed to an escalation. With that, the supply would also increase, industry sources said.
“We have been raising the issue for 6 months. In order to sustain, the rates need to be increased,” said Explosives Manufacturers Welfare Association (EMWA) chairman RD Vakil.
The industry also blames the CIL policy for the shortage. The withdrawal of 40% of the explosives required by CIL is granted to the explosives division of Indian Oil Corporation Ltd (IOCL) on the basis of a nomination. The private sector must compete for the remaining 60%. This leads to tough bidding and the lowest rates are offered. “It worked normally. The abnormal rise in AN rates disturbed the calculation. It is no longer viable to provide a full quantity without an increase,” Vakil said.
Sources said the nomination system affects healthy competition. IOCL is offered a higher rate compared to private companies, but its supplies are insufficient. A document presented at a meeting with the coal ministry shows that from October 21 to February 22, the IOCL had supplied up to 90% of the explosives.
AN costs up to 90,000 rupees through imports. Contract rates for the supply of explosives are around 61,000 rupees per tonne, industry sources said.