To meet the burgeoning demand for coal from power utilities, many of which are reeling from an acute shortage of coal stocks, Coal India Limited has committed to supply 313 million tonnes of non-coking coal this fiscal to the power sector as against 293 million tonnes last fiscal.
According to data compiled by the Central Electricity Authority on the coal stock position of the existing power stations in the country as on April 12 this year, 13 large power stations were facing super-critical coal stock shortages of less than four days while eight other power plants faced critical shortages with coal stock of less than seven days.
This situation has emerged despite the government’s mandate which says all power plants in the country near the pit-head were expected to maintain coal stocks of at least 15 days while those away from the mines should have coal stocks of 21-30 days.
Speaking to Business Standard, Partha S Bhattarcharya, chairman, CIL, the largest coal company in the world said, “This year CIL has committed to supply 313 million tonnes (mt) to power utilities in the country as against 293 mt supplied last year. Of the 313 mt, 303 mt will be earmarked for the existing power plants (as on March 2009) and the remaining 7 mt will be set aside for power plants which are set to come up this fiscal”
This apart, CIL is also likely to finalise the long term Fuel Supply Agreement with state-run National Thermal Power Corporation by the end of May which would ensure uninterrupted fuel supply to NTPC.
“The model draft has been initialled and board approvals are required now. It needs to be approved and cleared by respective boards, and final execution will take place by the end of May,” pointed out Bhattarcharya.
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However, the draft agreement is effective from April 1, he said. Central Electricity Authority acted as a chief mediator in this fuel pact agreement between CIL, the largest state-run coal company in India and NTPC.
Besides procedural delays the agreement was delayed mainly on account of the deadlock between CIL and NTPC over the contentious issue of trigger level of coal, which after months of dithering was settled at 90 per cent in view of the huge demand of NTPC and other power plants in the country.
However, Bhattarcharya pointed out that individual state power utilities will have to ink individual long term FSA with individual subsidiaries of CIL.
The FSA was introduced in the New Coal Distribution Policy of the Union coal ministry in 2007.
After signing of the FSA between CIL and NTPC, and others the coal stock position at the power generating stations was expected to improve as the long-term pact between the producers and consumers was aimed at ensuring a dedicated supply of fuel.
As regards the contract prices, Bhattarcharya said, “The contract prices will be according to the notified price as fixed by coal ministry.”
The Centre had de-regulated the prices of non-coking coal of grade D, hard coke and soft coke, and allowed CIL to fix the coal prices for grades E and F in 1997, some of the main grades supplied to Indian power plants at present.
From 2000, CIL was free to fix the prices of such grades of coal in relation to the market prices.
The notified price of non-coking coal had been revised thrice in the last nine years, once in 2001, 2004 and 2007, resulting in a price increase of 39 per cent cumulatively, roughly 3.7 per cent annually, which makes it stable in all respects, pointed out Bhattarcharya.
“The prices of CIL thermal coal are comparatively still 50-60 percent lower than the cheapest of international coal even after adjusting the gross calorific value (the main determinant of coal prices) in terms of Rs per million tonnes. The average price of grade E & F coal as supplied by CIL and its subsidiaries to the power companies under the last notified price is Rs 700-800 per tonne, which is around $16-17 per tonne at present,” he added.
According to industry sources, the cost and freight value of imported thermal coal at present is close to $80 as per the international market price.
Last year September the prices were as high as $171-180.