CIL grants fuel linkages in times of surplus

KOLKATA (miningweekly.com) – Coal India Limited (CIL) has started granting short- and medium-term coal supply linkages to all thermal power plants stranded till now without assured dry fuel.

With rising production and carrying high pit-head stocks, the miner has adopted a two-pronged strategy to bail-out all those power stations – captive and commercial – which had so far failed to clinch long-term fuel supply agreements (FSAs) or have forfeited their captive coal mines for various reasons.

As a first measure, CIL has started to liberally grant short-term coal supply linkage to various thermal power plants without having to go through comparatively protracted process of concluding FSAs.

Secondly, the miner has assured all thermal and other consumers that it would offer a much higher volume of 120-million tons of coal through forward auction over the remaining months of current financial year.

As further liberalisation for consumers, CIL has stipulated that those successful in bookings at the forward auctions would have six-month window for lifting stock on a rolling basis.

As for short-term linkage, CIL has agreed to offer a three-year ‘bridge linkage’ of coal supplies to captive power plants operated by National Aluminium Company Limited (Nalco), the country’s  largest integrated aluminium producer. The linkage for three years would offer Nalco the time to develop the two coal blocks – Uktal D and Utkal E in eastern Indian province of Odisha – allocated to the aluminium producer earlier this year.

Two weeks ago, CIL also agreed a coal supply agreement with NPTC’s 4 000 MW thermal power project under construction at Pudimadaka, in southern province of Andhra Pradesh. This project has been conceived based on imported coal, but with the Coal Ministry deciding to progressively reduce coal imports to zero, CIL has been directed to step in with assured fuel supplies.

As for volumes on offer through forward e-auctions, it is expected to take care of all the thermal power plant, those currently operational and those under construction, that were stranded for want of coal.

According to government data, there are about 57 000 MW of aggregate electricity generating capacity plants that do not have any coal supply contracts with CIL. Of this, 9 000 MW of capacity is ready for commercial generation and are being operated through merchant purchase of coal and around 48 000 MW of capacity are under construction but without any FSAs.

In a statement to the media, Mines and Power Minister Piyush Goyal said that there were no thermal power plant in the country which would remain stranded, owing to a lack of coal.

“If there is any power plant which comes to notice that is without coal, please flag us. There is to my mind no new buyers because we want to dilute stocks and we are looking at new buyers,” Goyal said in the statement.

CIL started the current financial with pit-head stocks of 56-million tons, which reduced to 40-million tons last month.

According to the Coal Ministry, CIL is on target to produce 598-million tons in the current year and has no plans to cut back production in view of falling demand.

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