Covid-19 lockdown: Smooth supply of coal by CIL to gencos despite default in payments

State-owned Coal India has decided to provide smooth fuel supply to power generation companies without any restrictions despite default in payments by the state generation companies (gencos), in view of prevailing coronavirus situation in the country, an official said.

"As per contract provisions, gencos are required to make payment for the monthly supplies in three instalments. Despite continuing defaults in payments by the state gencos which are adversely affecting the cash flow of the coal companies and huge accumulation of dues (totalling about Rs 14,000 crore for CIL as a whole), smooth supplies are being ensured without any restrictive measures," the official said.

Moreover, Coal India (CIL) has also extended the time limit for payments for release of coal by road.

"Value paid road delivery orders, both under fuel supply agreements (FSAs) and e-auction Schemes, are released upon payment to be made by the consumers.The schedule for payment are prescribed in the contractual provisions of FSA and e-auction schemes.

Failure to make payment as per schedule could result in short-lifting of coal under the FSAs. In case of questions secured under e-auction schemes, the failure to make payment entitle coal companies forfeit EMD in case of e-auction," he explained.

When some state governments had imposed lockdown in their respective states up to March 31, request of the consumers for extending the payment schedule up to April 7 was acceded.

"Further relaxation in payment schedule is also under consideration, in view of the nation-wide lockdown announced up to April 14," the official said.

The quantity of coal released through delivery orders issued under the FSAs and e-auction are required to be lifted within the stipulated validity period.

"Failure to lift the ordered quantity within the validity period might result in penalty for short lifting under the FSA and in case of releases under e-auction schemes, it could lead to forfeiture of EMD (earnest money deposit )," the official said.

Considering the difficulties faced by consumers for lifting coal due to lockdown, Coal India subsidiaries have been authorised to extend the validity period of the delivery orders for lifting, he added.