Come November, Coal India may start signing fuel supply agreements with power generation facilities commissioned after March 2009, committing to 65 per cent assured domestic supplies in 2012-13. The company aims to step up guaranteed domestic supplies to 80 per cent over the next couple of years.
The Coal India board has allowed the PSU miner to offer 15 per cent imported coal supplies as part of the fuel supply agreement (FSA) on a “cost-plus” basis. This is to enable the total guaranteed supplies touch 80 per cent, as directed by a Presidential Order. The proposal to supply imported coal at market price (cost-plus), however, is likely to remain on paper, as power producers may gain more by making such purchases directly.
“Except the uncertainty on the pooling proposal, the FSA issue is finally sealed,” a senior company official said, referring to the decisions of the last board meet. “Nothing else can be done,” he added.
MoU supply only till Dec
The company hopes to finalise the FSA decision at the next board meeting in end-October, and roll out new supply norms by November.
Entering into fuel pacts will also bring an end to supplies through memorandums of understanding (MoUs).
The lifeline was opened to ensure fuel supplies as long as the FSA issue remained unresolved. NTPC was a major gainer from such supplies.
“MoU supplies were scheduled to end in August. The Board has extended the deadline to December. There is no way we can stretch it further,” the CIL official said, indicating that the FSA uncertainty must end by December.
Should NTPC accept the new FSA terms? The state-owned power major was consistent in its argument that the modalities of the new set of FSAs must be similar to the FSAs signed before April 2009.
According to the CIL official, there is no scope to extend preferential treatment to NTPC.
Production surges
After nearly three years of slow growth, it is boom time at CIL’s mines. Barring the sole exception of Western Coalfields, all mining subsidiaries reported production growth, taking the aggregate output up by 8.2 per cent to 191.5 million tonnes in April-September. In absolute terms, production grew by 15 million tonnes against an annual growth target of 29 mt. Offtake (actual supplies to consumer) grew a little slower, at 7.2 per cent to 214.5 mt.
A higher sales volume, compared to production, indicates that a part of the pithead inventory was diluted to ensure higher availability of coal in the system. Pithead stocks diminished by 23 mt, during the period.
“The 6.6 per cent annual production growth target is now achievable. However, offtake remains a concern,” the source said.