The Hindu Business Line : CIL subsidiaries to enter into supply pacts with users

“Our coal producing subsidiaries will issue notices to customers within this week for entering into supply agreements latest by April 30,” a senior CIL official told Business Line, adding that consumers entering into firm agreements would be receiving supplies at notified prices beginning May.

The CIL subsidiaries, which will introduce the few supply agreements, are Eastern Coalfields, Bharat Coking Coal, Central Coalfields, South Eastern coalfields, Mahanadi Coalfields, Northern Coalfields and Western Coalfields.

Introduced by the new coal distribution policy, the supply pacts will do away with the existing linkages and introduce a firm ‘take-or-pay’ system, whereby customers will have to pay for non-lifting of the allocated quantities at notified prices. CIL will also be equally responsible for supply of agreed quality and quantity of coal.

As per the new policy, all coal consumers except those in the small and medium sector (SME) consuming up to 4,200 tonnes a year, will have to enter into separate FSAs. Supplies to SMEs will be made through a State nominated agency and the latter will have to enter into a supply pact with CIL.

Power (including captive power) and fertiliser are eligible to get normative supplies for the entire quantity required. Other consumers will get 75 per cent normative supply. All the existing linkages — which do not make it mandatory for the customer to lift the quantity offered — will be replaced by firm allocations and the corresponding FSAs.

Forward e-auction

Meanwhile, CIL is conducting roadshows for the proposed forward e-auction of coal. The forward auction will be introduced later this month. Only consumers can participate in the new platform.

“As per the distribution policy, approximately 38-40 million tonne (10 per cent of total production) of coal may be allocated for the existing e-auction and forward e-auction. We are expecting 35-40 per cent of the total to be sold through the forward auction,” the official said.

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