With paucity of coal threatening to cripple power production plans of major utilities, the Planning Commission has made a policy prescription on enabling captive block holders sell their surplus produce and make Coal India Limited compulsorily sign Fuel Supply Agreements with all existing and upcoming power utilities.

In a presentation prepared for the Prime minister’s Office, Planning Commission Member (Energy) Mr BK Chaturvedi said in view of short supply of coal to the tune of 63 million tonne, the captive coal block holders should be incentivised to sell their surplus production as a temporary measure. They key objective is to ensure that they produce much more their stated requirements and at the same time not profiteer.

The Plan panel prescription says that the surplus produce should be handed over to CIL and the fuel should be subsequently e-auctioned among power utilities, who can pay the state-run miner.

Mr Chaturvedi in his presentation said that “CIL after deducting the notified price may deposit 75% of any amount over and above the said price in the government treasury and 25% be refunded to them as an incentive. CIL and the coal ministry should discuss this with the captive miners before finalising the incentive mechanism. The coal ministry is also advised to work out other schemes on similar lines.”

According to the presentation FSAs have not been signed after 2008-09 while some of them have been inked for providing only 50 per cent of the requirements rendering such agreements non-bankable. Therefore, FSAs should be signed with all power producers for the 11th Plan and those slated in the coming 12th Plan period. Chaturvedi suggested for power plants set up before 2008-09 FSAs be restricted to 90% of domestic coal.

(Sourced from www.indianexpress.com)