KOLKATA: Coal India will guarantee fuel supply to only those firms which have contracted power sales for 20 years, significantly reducing its requirement for additional coal, top company executives said after a meeting with ministry officials regarding Tuesday’s Presidential decree.
The Presidential directive asked the company to sign fuel supply agreements (FSAs) with power producers, with penalties if supplies dip below 80% of the commitments. It was also decided at the meeting that the penalty in case of inability to meet the trigger level would be brought down to a minimum, officials said.
The company now hopes to finalise the fuel supply agreements and upload it on its website for power generators to come forward and sign next week.
Signing FSAs with generators, who qualify, is expected to drastically reduce CIL’s requirement of additional coal. “Nevertheless, we will now have to calculate the exact additional volume once again which will be less than the volume calculated earlier,” a CIL official said.
At present, it is working on finalising the import options that will be offered to power generators. It has also decided to supply the exact quantum of coal that will be necessary to generate the quantum of electricity required to meet the power purchase agreements.
“Following finalisation of these clauses, it will be legally vetted and put up on its website so that power producers can sign,” a senior Coal India official said.
CIL will ask the power companies to furnish details of the PPAs signed with power distribution utilities. It will supply the volume of coal that will be sufficient to supply the quantum of electricity that the unit needs to supply under the PPA and not for the entire capacity of the unit. PPAs for 20 years will only be honoured.
For example, a 500 MW unit may have signed a PPA with a state government for supplying 200 MW of power for 20 years. CIL will supply the quantum of coal sufficient to generate 200 MW – the volume signed under the PPA.
On the import front CIL will offer imported coal at sold at cost plus basis on the landed price of coal. However, power producers will have the option of indicating whether they intend to take the imported coal from CIL.