CIL to modify coal supply pacts with power companies

To break the long deadlock by shipping out minimum 80% of the contracted quantum

Coal India will modify fuel supply pacts before signing them with power companies to incorporate the changes that have been proposed by its board at this week's meeting, thereby breaking the deadlock over the issue of minimum assured supply of fuel to them.

Central Electricity Authority (CEA), in a letter, would inform the Power Ministry about the necessary modifications to be made in the Fuel Supply Agreements (FSAs).

So far 27 companies have signed the pacts, which will also be tweaked in line with the new changes suggested by Coal India Ltd (CIL), sources said.

At the Board meeting earlier this week, state-owned CIL said it will sign FSAs with the power companies for shipping a minimum of 80% coal to them, out of the total contracted quantum.

The coal major would meet 65% of the supplies from domestic sources and would import the remaining 15%. It is yet to take a final call on whether the company would pool the price of domestic as well as imported fuel.

CIL Board's consensus follows a direction from the Prime Minister's Office to the company to sign FSAs for the supply of 80% of the contracted quantity, or the trigger level, failing which the supplier would be penalised.

The Planning Commission and the Power Ministry have suggested pooling the prices of imported and domestic coal to neutralise the impact of higher prices of imports.

The coal major had, in June, lowered its production target for the financial year 2012-13 to 440 million tonne from the estimate of 452 million tonne in its annual plan, citing various reasons like heavy rainfall, strike and delays in the grant of environmental clearances to coal projects for the downward revision in the production target.

The public sector company had missed its April-September target by about 20 million tonne, recording an output of 176 million tonne, as against the target of 196 million tonne.

Coal India's production target of 460.5 million tonne for 2010-11 was revised down to 440.2 million tonne.