Calcutta, July 31: Coal India Ltd (CIL) today agreed to supply a minimum of 80 per cent of the annual contracted quantity under the fuel supply agreement (FSA) to power companies. However, power firms will have to pay a higher price for domestic coal under the price pooling mechanism.
Coal India chairman and managing director S. Narsing Rao said the board reached an agreement to supply 65 per cent of the requirement of power firms through domestic production and meet the shortfall of 15 per cent through imports.
The PSU will import 18-20 million tonnes of coal in the current financial year, Rao added.
“Accordingly, required changes will be made in the fuel supply agreements done in April. It (import) can be through Coal India or through other agencies,” Rao said.
The board, however, has not taken any decision on the agents through which CIL will import the coal.
“Import is only practical when there is a price pooling mechanism,” Rao added.
A senior CIL official said the board had agreed to a pooling meaning power firms will have to pay a higher price for domestic coal.
Price pooling means a common price for domestic and imported coal on the basis of similar grade. Obviously, this pooled price will be higher than the domestic price. The pooled price will be applicable to all consumers signing the supply pacts.
Power producers have broadly agreed to pooling, according to the CIL chairman.
The Planning Commission and power ministry had already suggested pooling of the prices of imported and domestic coal to neutralise the impact of higher prices of imported coal.
The development follows a direction from the Prime Minister’s Office to the PSU early this month to sign the pacts with power firms for the supply of 65-80 per cent of the contracted quantity amid delays in signing of the agreements.
Since April 2009, only 27 power plants of the 49 have signed the supply agreements. These include Adani’s Mundra power plant, Lanco’s Anpara Power, Reliance Power’s Rosa project and Calcutta Electric Supply Corporation.