National miner Coal India Ltd (CIL) has opened the floodgates of coal supply for power generation units by removing any restrictions on the quantity of coal contracted. Any power plant that has signed a fuel supply agreement (FSA) with CIL can now procure as much coal as it requires. Earlier, CIL supplied coal as per the “annual contracted quantity” (ACQ) it signed with a power plant.
“CIL has paved the way for allowing supplies beyond ACQ to thermal power plants in the country, including independent power plants (IPPs). This applies to Gencos that have signed power supply agreements with such an enabling clause,” the company said in a statement on Tuesday. It added that in the last week of June, the CIL board had given the nod to allow supplies beyond ACQ. “This makes it easier to do business, simpler and avoids duplication of work,” it said.
Coal would be supplied at the same price as signed in the respective FSA by the power plant, a CIL executive said.
With this, the CIL has done away with the earlier provision that permitted supply of coal up to a maximum of 120 per cent of ACQ to power plants and independent power producers. The New Coal Distribution Policy, 2007, for the first time laid down the concept of ACQ under which the CIL supplied a certain threshold of a power plant’s coal requirement. It was 80-90 per cent at that time. It was increased to 100 per cent in FY23 and earlier this year, it was raised to 120 per cent, given the availability of surplus coal with the CIL.
“Now, the simplification would benefit power plants that prefer to extract larger quantities of coal beyond their stipulated ACQ. The incentive for CIL is that it would increase its supplies at a time when coal demand is showing signs of slowing down,” the company said.
In an interview with this newspaper last month, PM Prasad, chairman and managing director of CIL, had said that volume maximisation is one of the tools the company is using to boost its revenue. “Volume growth in coal sales maximises our revenue because the prime cost is fixed and any increase in sales is advantageous,” Prasad had said.
CIL’s pitheads currently have a coal stock of 72 million tonnes (MT), up 47 per cent compared to 49 MT as on August 12, 2023. The national average coal stock with power plants stands at 14 days, which is a multi-year record during monsoon months.
During FY24, CIL supplied 101.6 per cent of the projected coal demand. It registered a 5.4 per cent growth in coal supply over FY23. Out of a total of 153 domestic coal-fired power plants in the country, CIL has long-term tie-ups with 127 plants, totalling 592 metric tonnes, including 50 IPPs.
First published: August 13, 2024 | 6:00 pm IS
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