The coal ministry has asked state-owned Coal India Limited (CIL) to conclude the fuel supply agreement (FSA) with all 1,350 valid consumers as soon as possible as two years have passed since the decision to supply coal under FSA was taken.
A coal ministry official told FE that both the ministry and the CIL agreed to shift from a linkage to FSA regime in 2007. The government started working on a new coal distribution policy, wherein FSA was adopted in January 2007 and in October the new policy was approved.
However, it was only in May 2009 that CIL could sign a model FSA with NTPC, the largest consumer of CIL coal, following which it started signing FSAs with other power utilities.
HK Vaidya, CIL?s chief GM, marketing, said of the 1,350 FSAs, 120 are in the power sector, of which 50 has entered into FSAs till date.
In all, 1,230 consumers are in the sponge iron, crockery, briquette, cement, paper, fertiliser and other sectors including captive power production, of which FSA has been signed with 1,167 consumers to supply 63.5 million tonne of coal per annum with a trigger level (the minimum supply and lifting clause) of 60%.
CIL has committed to supply 312 mt to the power utilities in 2009-10 at a trigger level of 90% at the start of the FSA regime against 292 mt it supplied in 2008-09 under the linkage regime. It has committed to supply coal to NTPC alone in the current fiscal.
Ministry officials said since the model FSA with the power sector (NTPC Ltd) was signed on May 28 this year, the progress on signing FSAs with other power utilities are not unsatisfactory. But they point out that CIL should have wrapped up its FSAs with consumers in other sectors since the process began from 2007-end.
There was no problem in fixing the trigger level with other sector companies unlike the power sector, which took about two years to come to a settlement.
A CIL official said the ministry is putting pressure to sign FSAs, especially with seven developers of captive power projects to cumulatively generate 204 mw. They were earlier granted coal linkage to meet their feedstock requirements. The trigger level applicable to them is 60% because the captive power projects are in the steel, cement and chemical sectors, but those companies are demanding 90% trigger level since they are producing power.
??The ministry has issued instruction to conclude FSA with the seven companies but with no special guidance in regards to trigger level,?? the CIL official said.