Fuel supply breather for Coal India

New Delhi, June 22: The Prime Minister?s Office today scaled down the minimum quantity that Coal India has to supply to power firms to 65 per cent of the amount committed in the fuel pacts.

Under the revised terms, the PMO asked the coal producer to supply at least 65 per cent of the contracted quantity within the first three years after signing the fuel supply agreements (FSA), coal secretary S.K. Srivastava said after a meeting with PMO officials.

CIL had sought a lower commitment on the assured fuel supply against 80 per cent directed by the PMO earlier.

The PMO, however, said the supply had to increase to 72 per cent in the fourth year followed by 80 per cent in the fifth year of the agreement, sources added.

Private power producers are disappointed with the revised supply terms. ?The plant load factor (PLF) will be only 50 per cent with 65 per cent coal supply and no plant can function at such low supplies. The power regulator will not allow the developer to recover even fixed charges with such low PLF,? said Ashok Khurana, director-general of the Association of Power Producers, which represents firms such as Anil Ambani?s Reliance Power and the Tatas.

The directions were given after a meeting of Pulok Chatterjee, principal secretary to the Prime Minister, with coal secretary S. K. Srivastava and CIL chairman and managing director S. Narsing Rao.

The coal PSU is set to ink agreements with 48 power companies to enable them to operate an estimated 18,522MW of capacity, implying that CIL will have to annually supply an additional 54 million tonnes over and above its current capacity.

Coal India had also suggested a 0.01 per cent penalty on not delivering the fuel on time, but the penalty would only be applicable after three years of signing the pact. This prompted power firms to seek the PMO?s intervention.

Sources said the PMO had also asked Coal India to increase the penalty to 10 per cent without any moratorium.

CIL, which accounts for over 80 per cent of the domestic coal production, will consider the PMO?s directions at its board meeting, which is likely to be held next month.

?We will now be having a board meeting of Coal India. They may take a final view on all these issues (penalty, FSA, coal imports),? Srivastava said.

CIL, which missed the revised production target last fiscal and produced 435 million tonnes of coal, has set a target of 464 million tonnes for 2012-13.

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