Coal supplies to be in line with Fuel Supply Agreement

The Dollar Business  Bureau The Minister of State for Power, Coal & New and Renewable Energy Piyush Goyal, on Thursday, informed that the distribution of coal, for all sectors of consumers, would be done under the Fuel Supply Agreement (FSA), as per the government’s New Coal Distribution Policy (NCDP). The Minister stated that for the consumers who remain not covered under FSA, the coal would be supplied through e-auction, where 10% of the annual production will be put for sale under NCDP. Whereas, for the consumers whose annual production is less than 4200 tonne per annum, the coal would be supplied under FLA to the State nominated agencies, the Minister added. To facilitate the liquidation of coal stock affected by the logistic constraints, the coal is also supplied under a short-term Memorandum of Understanding (MoU) to various consumers, including their own logistics, the Minister informed. The Minister further informed that the FSAs with the existing consumers including power will come under final execution by the coal companies and the supply would be fully monitored under FSA policy. Stating that the Standing Linkage Committee, an inter-ministerial body holds the responsibility of FSA materialization, the Minister also informed about the problems pertaining to the signing of FSAs. While informing that the the main issue in implementation comes due to a gap in demand and supply, the Minister stated that the commitments made for FSAs are much higher than the projected availability from the domestic coal production. In line with the government’s approval for coal supplies to the identified Thermal Power Stations of 78,000 MW capacity, commissioned/to be commissioned, during the period from April 4, 2009 to March 31, 2015, the revised arrangements have been made taking into account the level of domestic production. In view of the overall domestic availability and the actual requirement by the Thermal Power stations, it has been decided that the FSAs will be given for the domestic coal quantity of 65%, 67% and 75% of Annual Contracted Quantity (ACQ), for FY13-14, FY14-15, FY15-16 and FY16-17, respectively, for the power plants having normal coal linkages, the Minister informed. In case of further need to meet the FSA obligations as required by the Thermal Power Plants (TPP), the Coal India Limited (CIL) may import and supply the same to the willing plants on a cost-plus basis. There is also a case in which the power plants may directly import the coal, but, in that case, the FSA obligations of the CIL in accordance to the import component would be considered discharged, the Minister added.    

This article was published on March 19, 2015.