The power ministry has proposed that Coal India Ltd (CIL) be directed to stop the premium sale of thermal coal through e-auction route and divert the supply to power plants facing fuel crisis despite coal linkage. The producer can be allowed to make an across-the-board hike in its notified coal prices so that it is able to make up for the lost revenue, the ministry said, in a letter to the prime minister Manmohan Singh.
This revenue-neutral mechanism should be maintained until CIL is in a position to meet its fuel linkage supply commitments, the ministry said.
Significantly, Singh is holding a meeting on Thursday to review progress in power and coal mining projects. Power ministry?s suggestion is likely to be discussed in the meeting.
CIL has been selling a part of its annual coal production through the e-auction route to optimize its revenue. In the financial year 2010-11, the company sold nearly 40 million tonnes of thermal coal with average price realization about 80% higher compared to the notified price.
The power ministry?s suggestion has the backing of the industry. ?CIL has not signed any fuel supply agreements (FSAs) with power generators post March 31, 2009. As a result, 18,000- 20, 000 MW capacity does not have confirmed FSAs, which entails coal shortage of 90 million tonnes. The diversion of thermal coal from e-auction will help mitigate the fuel crisis to some extent,? Ashok Khurana, director general, association of power producers (APP), said.
APP represents key private power generators like Tata Power, Reliance Power and GMR Energy which have lined up projects worth over 1,20,000 mw capacity for implementation. CIL has committed to supply 319 million tonne coal to the power sector during the current financial year 2011-12. That leaves 77 million tonnes of coal shortfall for the power sector.
About 50 million tonnes of coal is stranded at various pitheads for the shortage of rail rakes. ?If this coal quantity can be transported, fuel shortage for the 11th plan projects would be addressed,? Khurana said.
