CIL, NTPC moves towards fuel supply pact

Kolkata: Coal India and the power utilities led by NTPC seem to have moved closer to a consensus over the long pending fuel supply agreement. The deadline for entering the pact, however, is once again extended by two months from November 30 to January 31, 2009.

According to the CIL Chairman, Mr Partha S. Bhattacharyya, the differences over the trigger level or the guaranteed off-take/supply levels are “largely resolved” with the Central Electricity Authority (CEA) stepping in to mediate the issues.

At a meeting on November 11, CEA has reportedly agreed to accept the annual action plan (AAP) targets set by the Planning Commission as CIL’s total annual coal supplies to the power sector. The latter would therefore meet the additional requirements, if any, through its captive production and (or) imports.

“Once they agreed to accept the action plan targets we were also agreeable to set the trigger level at 90 per cent of the same,” Mr Bhattacharyya said. The company had previously set the trigger at 60 per cent which was rejected by NTPC and most of the other utilities. Failure to meet the assured supply/off-take clause would invite penalty either on the seller or the buyer.

According to him, CEA had further agreed to meet with all the utilities and re-allocate the annual supplies among all power plants in a manner that coal can be reached to all in the most efficient manner from CIL mines taking into account the logistics and other related issues. “This is an elaborate exercise, requiring participation of both buyer and seller and is expected to take two months,” he added.

“Coal production cannot be increased overnight. We are increasing our production as per the targets set by the Planning Commission. However, the demand-supply gap will be over 200 million tonne at the end of this Plan period. Considering the increasing gap between supply and demand and the power sector’s earlier demand to fulfil its entire demand, we had kept the trigger at low levels to safeguard our long-term interests,” Mr Bhattacharyya said adding that the domestic supply shortfall had accrued due to power sector’s failure to bring captive blocks into production.

According top CIL officials, the company has supplied 164 million tonne coal to power utilities between April and October, this year which was 2.5 million tonne more than the action plan targets.

India has approximately 75 coal-based thermal power stations generating 66,000 MW, out of which 72 (64,000 MW) are catered by CIL.