The increase in trigger level has been done under the existing provisions of the Fuel Supply Agreement (FSA) and those willing to opt for the higher trigger level will have to do a side agreement with CIL.
In a bid to give some more relief to the power companies amid the COVID-19 pandemic, public-sector miner Coal India has decided to increase the supply trigger level from 75% to 80% of the annual contracted quantity (ACQ).
A CIL official said the new trigger level is not binding on consumers and those willing to continue at a 75% trigger level may continue to do so. But the new trigger level would help the plants running at a higher plant load factor (PLF) source more coal domestically and CIL will have to supply the extra quantity under a new agreement.
This could, however, lessen the demand for e-auction coal, which fetches CIL a premium above the notified price.
The CIL official said increasing trigger level is likely to encourage higher lifting.
Coal stock at the pitheads are at an all-time high of 75 million tonnes. Though demand from the power sector has been recently falling, the government wants to ensure thermal power plants don’t have to import coal.
The increase in trigger level has been done under the existing provisions of the Fuel Supply Agreement (FSA) and those willing to opt for the higher trigger level will have to do a side agreement with CIL. The CIL subsidiaries have been asked to implement the increased trigger level with immediate effect.
CIL’s FSAs with power utilities stand round 560 mt. Of this, 270 mt of FSAs belong to power plants commissioned prior to the New Coal Distribution Policy (NCDP) regime whose trigger level was 90% of ACQ. For those FSAs amounting to 290 mt commissioned after NCDP, the trigger level was 75% of ACQ. If all eligible power utilities agree for increase of trigger level to 80%, FSAs for the ongoing fiscal could see an increase of 14 mt.
The CIL official said coal companies should increase the level of delivery to the power plants as supplies less than the committed trigger level would attract penalty. On the other hand, power generators will get more coal under FSA.