With the power ministry opposing the recent plea by state-owned miner, Coal India Ltd (CIL), to bring down the supply commitment level in new pacts with power companies to 65 per cent, an official level meeting in the Prime Minister’s Office (PMO) today decided to stick to the earlier 80 per cent trigger level for supply.
“It was decided in Friday’s meeting that the trigger level for supply by CIL would be retained at 80 per cent. Also, bringing in price pooling of coal in case of imports was approved,” a senior official told Business Standard after Friday’s meeting. The meeting was attended by officials from the power, coal and environment ministries.
Coal India had asked for low supply commitment provisions in the new Fuel Supply Agreements (FSAs) in a meeting at the PMO last month. As a compensation, the miner had agreed to consider diluting contentious penalty provisions in the pacts being signed with power companies to end the coal supply logjam.
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The power industry had protested the proposal, arguing that a trigger level of 65 per cent would lead to drastic reduction in the Plant Load Factor (PLF) of power plants, rendering these economically unviable.
CIL has been involved in a turf battle with its consumers over the twin issues of commitment and penalty. While CIL had earlier agreed to commit supplying 80 per cent of the power companies’ requirement in new FSAs, it had imposed, as a condition, a low penalty level of 0.01 per cent of the value of shortfall and a three-year moratorium on penalty in FSA document. This had miffed power companies, which had sought the PMO’s intervention again.
The company’s board is likely to meet on Tuesday to take a final call on the trigger level for supply and penalty provisions.