The Hindu Business Line : Coal India may extend June 30 deadline for fuel supply agreements

Lukewarm response from the power sector may force Coal India Ltd (CIL) to extend the June 30 deadline for signing the fuel supply agreements (FSA) with its customers. According to the New Coal Distribution Policy (NCDP), FSAs will replace the existing linkage system for coal supplies.

"The power sector has recently started entering into FSAs. Karnataka Power Corporation Ltd was the first to sign the agreement. However, we may have to extend the last date to accommodate all the power utilities," the CIL Chairman, Mr Partha S. Bhattacharyya, told newspersons here on the sidelines of a seminar organised by city-based Bharat Chamber of Commerce.

Approximately 75 per cent of CIL's existing annual production of 380 million tonnes goes to the power sector. Out of 75 major coal-based thermal power stations in the country having a combined capacity of 66,000 MW, CIL caters to 72, having a generation capacity of 64,000 MW. The new distribution policy makes it mandatory for the company to meet the entire requirement of the sector at a notified price.

Supply agreements

Though maintaining that the power sector was slowly but surely entering into supply agreements, the CIL Chairman said that the process was getting delayed, as the utilities were yet to come to terms with the minimum assured offtake or supply level (described as trigger) included in the proposed agreement, the violation of which may invite penalty on either the supplier or the buyer.

For existing customers, the assured supply/offtake level is set at 60 per cent of the agreed quantity under the FSA. For new customers, the trigger is set at 50 per cent of FSA quantity.

"I have personally communicated to all utilities explaining the rationale behind the proposed system. We are hopeful that they will enter into the agreement, sooner or later," the CIL Chairman said, adding that he was slated to meet the NTPC Chairman on June 25 in this regard. NTPC is the single largest buyer of coal from the power sector.

According to Mr Bhattacharyya, apart from the power sector, CIL has made sufficient progress in entering into FSAs with its customer base. "Out of a total of 1,100 customers, we have already entered into supply agreements with over 900," he said.

Coal Regulator

Earlier, addressing the seminar, the Union Minister of State for Coal, Mr Santosh Bagrodia, said that the Government was moving ahead on the proposal of appointing a coal regulator. The Ministry has already forwarded a proposal in this regard to the Planning Commission.

Mr Bagrodia also touched upon the need for a comprehensive act on coal. Though he said that the Centre was working on the same, he did not comment either on the present status of the proposal or its salient features.

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