Coronavirus lockdown: Coal India extends payment deadline till April 21

Pending demand for Deferred Payment Letters of Credit implemented as additional mode of payment along with irrevocable revolving L/C for coal supplied to power producers, especially IPPs

Aiming to lower the payment burden on its consumers amid the ongoing lockdown, Coal India Limited (CIL) has further extended the time limit for payment of coal booked by its customers, by two more weeks till April 21 from the earlier deadline of April 7.

"We are reaching out to our customers with the most friendly initiatives that we can in this difficult period. The aim is to ease the stress of our customers," a company official said.

The long-pending demand for Deferred Payment Letter of Credit has now been implemented as an additional mode of payment along with Irrevocable Revolving L/C for the coal supplied to power producers, especially independent power plants. This will help cash-strapped power producers avail credit facility through their banks to tackle the liquidity crunch.

Earlier, in view of the lockdown owing to the Covid-19 crisis, the Centre had approved a relief package for the power sector that grants state-owned electricity distribution companies (discoms) a three-month moratorium to make payments for the electricity bought by them from the generating companies (gencos). The payment security amount was also halved for upcoming power purchases.

Apart from these, late payment penalty has also been waived.

These measures could potentially stress the financial health of gencos. As a concentrated effort, CIL has decided to continue with coal supplies despite payment defaults. According to provisions of contracts signed between gencos and CIL, the power producers make monthly payment for the coal purchase in three installments.

A CIL official said that despite payment defaults, coal supplies to gencos are assured although dues from gencos stand at around Rs. 14,000 crore. CIL has also decided to extended the validity period for lifting of coal under all auctions without any penalty. Earlier, failure to lift the ordered quantity of coal within a stipulated time period attracted forfeiture of earnest money deposit under auction schemes.

“Now, this clause has been done away with till the closure of lock down period to non-regulated sector (non power sector) as well”, the CIL official said.

Coal stocks in the country now stand at 120 million tonnes (mt) with pitheads of CIL heaped high close to 75 mt. The rest 45 MTs of coal stock is at thermal power plants sufficient for 28 days consumption.

A CIL official said that currently there are no power plants in the country in critical or super critical situation for want of coal.

Power companies importing coal are being encouraged to substitute their requirement of imported coal with domestic coal of CIL by regular monthly allotments.