Coal India to supply 65% fuel for first three years

SIDDHARTHA P. SAIKIA, THE HINDU BUSINESS LINE

Ministry to propose revised pact for power firms today

NEW DELHI, JUNE 21:
The Coal Ministry will on Friday put up a proposal to the Prime Minister’s Office on the new modalities for fuel supply by Coal India Ltd to power producers.

According to the Ministry’s latest plan, Coal India will supply 65 per cent of the fuel demand for the first three years after signing a fuel supply agreement (FSA).

The miner will supply 72 per cent of the demand in the fourth year and 80 per cent from the fifth year.

“In case of any shortfall from these levels, there would be a flat penalty of around 10 per cent,” a Government official told Business Line.

AGAINST PRESENT NORM

This goes against the present FSA norm, according to which Coal India is suppose to supply up to 80 per cent of the fuel requirement.

Failing this, there would be a 0.01 per cent penalty, but only after three years. Private power producers are opposed to this ‘monopolistic approach’ by Coal India.

“If the PMO agrees to the new plan, Coal India will have to take Board approval to make changes in the current FSA. However, it cannot be predicted till PMO gives its go-ahead,” the official said.

Apart form this, the PMO will review ‘nine key issues’ related to the coal sector on Friday, including de-allocation of captive mines, coal import requirement, pool-pricing for imported and domestic coal, new coal auction policy and so forth.

PANEL SET UP

The Government on Thursday set up an inter-ministerial panel to decide on de-allocation of coal blocks given to private companies and not mined till now.

“The Additional Secretary to the Coal Ministry, Ms Zohra Chatterji, heads the panel, which will have representatives from the Ministries of Power, Steel, DIPP, Finance and Law; and the Chairman of CMPDIL,” said a Government official.

The Coal Ministry had issued show-cause notices for de-allocation of blocks to 58 companies.

The panel will review the replies sent by the companies and recommend the blocks that need to be de-allocated.