NEW DELHI: After a Presidential directive, Coal India (CIL) is gearing up to enhance its production in a big way. The board of the biggest coal miner in the country and the heads of its subsidiaries, who met the coal minister Sriprakash Jaiswal on Wednesday, have been told to produce no less than 464 million tonne (mt) of coal during 2012-13, and avoid expensive imports to meet the commitments made under the new fuel supply agreements (FSAs).
Imported coal is 70-80% costlier than domestic coal.
“There would be no need to import, if they meet their next year’s target of coal production,” Jaiswal said after the meeting.
The target may not be easy for CIL as it has failed to meet the goal even for 2011-12 and produced only 435.84 mt of coal (1% growth over previous fiscal) as against the target of 447 mt. Though the production for 2011-12 is 4 mt more than a year before, the CIL officials said, increasing it to 464 mt, would be difficult.
“To meet our commitments under the new FSAs, we would have to increase our production by 6%-7%. But, if there are some uncertain conditions, like heavy rain, etc, it would be very difficult to do so. We would need to import coal in that case,” the chairman of one of CIL’s subsidiaries, said.
The government has invoked Presidential directive against Coal India to sign FSAs with power companies, ensuring to meet 80% coal supply. The FSAs has been sent for legal vetting and are expected to be signed in a week or two.
“FSA documents have been discussed in the (company) board. It is under legal vetting, will be placed before the board again and then it will be signed,” CIL’s acting chairperson Zohra Chatterji said.
A coal ministry official said that the FSAs would be signed only with companies that have power purchase agreements (PPA) and is likely to benefit mostly the state-owned power companies. CIL has not entered into any FSA since 2009.
The board members, however, seemed unclear about the penalty under these FSAs. Jaiswal had said the decision on penalty has been left to CIL. A CIL official said that “it is being worked out”.
CIL will also have a new chairman and managing director (CMD) shortly.
The government has already issued an appointment letter to the Singareni Collieries Company (SCCL) CMD SS Narsing Rao to take charge at CIL.
“Rao is likely to take the charge of Coal India CMD in a week’s time. His appointment letter has been issued by the coal ministry today,” coal ministry official said.