A new presidential directive issued to Coal India, the second since April 2012, has asked the company to sign fuel-supply agreements (FSA) for the entire 78,000 MW power capacity that the Cabinet committee on economic affairs had asked the company to supply fuel to, up to the limits prescribed.
Confirming the receipt of a new presidential directive, CIL chairman and managing director S Narsing Rao told FE that this would make it incumbent on the miner to set a new production target. He explained that a hiking of the target ? the April 2012 presidential directive spoke about supply to 60,000 MW ? would enable the firm to avoid slippages.
Additional coal is required on account of tapering linkage for 11,000 mw capacity and normal fuel linkage for 7,000 mw of stranded capacity. Industry sources said some of these projects, expected to go onstream in the six-year period between April 2009 and March 2015, could face delays, and if the PSU is able to supply enough coal to cater to 60,000 MW capacity, the FSA obligation would be met.
Department of public enterprises (DPE) secretary OP Rawat told FE a PSU must not fail in complying with the Presidential directive and if it faces constraints, it should tell the administrative ministry at the start itself.
As per the FSA, at least 80% of the coal requirement of power plants (LOA quantity) should be met by CIL. In case of shortage of domestic production, the PSU can supply imported coal to bridge the gap.
There is however a limit set on imports ? 65% of the power plants? requirements has to be be met from CIL’s own production and another 15% from the imports it undertakes. In other words, over 80% of CIL’s obligation (to meet the prescribed supply to the power plants) would be fulfilled through domestic sources.
Rao, however, clarified that the latest directive has nothing to do with price pooling, a method for pricing coal, by averaging the prices of domestic and imported coal.
The CCEA dropped the proposal of price pooling in April this year, over issues of feasibility.
Rao is however confident that CIL would be able to meet its trigger level from domestic sources and imports would be made only against firm orders.
CIL has walked out of the policy of securing long-term import contracts and Rao earlier made clear that if at all any imports have to be made, they would be done through agencies engaged in imports. ?CIL would not go for any direct imports,?
Rao said.