Don’t ink fresh fuel supply pacts with buyers: Panel to CIL

Linkages are given by CIL to companies for their projects which have no captive coal mines.

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Taking a step forward towards auctioning of Coal India’s fuel supply pacts, an inter-ministerial committee has asked the state-run company not to ink any fresh such pacts with its prospective buyers and also not to process their applications for linkages.

Applications received in the past few months from various companies by CIL should not be processed “and kept in abeyance” till such a policy is finalised, the standing linkage committee (long-term) said.

The panel comprising of senior officials from coal, steel, power, Central Electricity Authority and department of industrial policy and promotion had met on March 12 to discuss the issue of granting fresh linkages. The coal ministry is learnt to be finalising parameters for auctioning the linkages to companies with end-use plants and is being assisted by SBI Caps in this exercise. The move also follows the recent electronic auctions of 33 coal blocks to private firms.

Linkages are given by CIL to companies for their projects which have no captive coal mines and need assured supply of fuel to run their operations. CIL and its five subsidiaries have so far issued 177 Letters of Assurances (LoAs) for power projects to be commissioned during the Eleventh-Twelfth Plan periods.

A top CIL official on Tuesday told The Indian Express that the company is unable to give additional fuel to both fresh and existing applicants as it is already committed to supply its existing output to companies which have already inked FSAs.

However, in view coal imports rising to 156 million tonnes in April-December 2014-15, the ministry is keen to ensure adequate fuel supply for nearly 15,000 MW fresh coal-fired electricity generation capacity to be commissioned by 2015-16. But with CIL is likely to miss its overall output by nearly 10 million tonne in 2014-15 the panel is averse to the PSU to sign any fresh fuel supply pacts.

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First published on: 25-03-2015 at 08:12 IST