Coal India Ltd (CIL) has extended the letter of credit facility for coal procurement to non-power consumers.

“In order to provide relief to the power sector consumers and increase liquidity in the system, CIL has already allowed the facility of usance letter of credit to power sector consumers for payment of coal instead of cash advance for the fuel supply agreements (FSA). This shall help significantly in improving the working capital cycle of the generators,” a statement from the Coal Ministry said.

“CIL has introduced the same mechanism for customers of non-power sectors in the month of April 2020. This shall be a big boost to the liquidity in the markets and at the same time shall also provide the much-anticipated relief to the consumers of coal,” the statement added.

CIL had earlier decided to not impose late payment penalties on power sector customers for not lifting contracted coal quantities within the stipulated time period. “CIL continues to supply coal, despite payment defaults, to the power generating companies in the Central and State sectors in the midst of Covid-19 crisis,” the company had said.