The Prime Minister's Office has accepted Coal India's plea to meet only 65% of the coal requirement of power plants, instead of 80% proposed earlier, a move that generation companies say will be "disastrous" for the sector.
Government sources said that but the state run miner has been asked by the PMO to increase the penalty for short supply from 0.01% and pay it from first year onwards. The PMO has also directed CIL to import coal through state run trading agencies, State Trading Corp and MMTC.
Officials said that CIL will supply coal to power plants at 65% of their requirement for the next three years and gradually increase it to 72% in 2015-16 and 80% from 2016-17 onwards.
Top coal ministry and CIL officials met the prime ministers' principal secretary, Mr Pulok Chattreji, on Friday to discuss issues surrounding fuel supply to power plants.
CIL told PMO that even with best efforts, its output would not be able to meet 80% coal requirement of power plants. The PMO has also asked the company's board to take a view on power producers' demand for a much higher penalty, price pooling of local and imported coal, officials said. Power producers said 65 per cent coal supply would not help projects operate economically.
Association of Power Producers D-G Ashok Khurana said that "Supply of 65% would imply plant load factor of 55%, which is far below the normative availability factor. If this measure is not accompanied by bulk coal imports, price pooling and across the board power tariff revisions to reflect blended fuel price, the outcome would be disastrous for power sector.”
Coal secretary Mr SK Srivastava said CIL would approach its board for final discussions on penalty clause, imports and price pooling. Sources said the board is likely to meet on July 8. He said that "A board meeting will take a final view.”
CIL board had modified its model FSAs after PMO directed it to supply 80% of required coal to power plants that have long-term pacts with distribution companies.
Source - Economic Times
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