With a view to expedite coal linkages for power projects proposed to be set up during the 11th Plan Period, the Ministry of Coal (MoC) has directed state run Coal India Limited (CIL) to take appropriate action on areas like issuance of Letters of Assurance (LoAs) and entering into Fuel Supply Agreements (FSAs) with the power consumers.
As the validity period of most of the LoAs issued in 2006 and 2007 has expired, the MoC observed that there is a need to review each case in terms of completion of the stipulated milestones. It may be noted that the validity period of the LoAs ranges from 24-30 months.
The Standing Linkage Committee (SLC) on coal chaired by Alok Perti, Additional Secretary (Coal) will meet on April 8 to discuss issues like conversion of valid linkage into LoAs or FSAs and review of the old LOAs issued to the power consumers with a validity period of 30 months.
The agenda of the meeting has been communicated to the CIL chairman, Partha S Bhattacharyya.
In its last meeting held on January 29, 2010, Additional Secretary (Coal) had suggested that in view of open ended approach for processing and issuance of LoAs, there are some delays and hence it would be desirable to have a time schedule for processing of LoA by state run coal companies like CIL and Singareni Collieries Limited.
Accordingly, it was decided that the coal companies shall complete the process of issuing Notices inviting commitment guarantee from the consumers within 30 days of the SLC meeting. CIL has been asked to send a copy of this notice to the Central Electricity Authority (CEA) and furnish a compliance report to the MoC after completing the process of issuing LoA.
The SLC has decided that for the power sector consumers, the financial closure in case of private sector companies or investment decision duly approved by the board in the case of public sector companies need to be achieved within three months from the date of issue of LoA. If the companies fail to meet this milestone, the LoA shall stand withdrawn and the LoA holder will have to apply afresh. When contacted, a top CIL official said, “A large number of cases wherein the power consumers have submitted their milestones are under scrutiny. However, in some cases, either the commitment guarantee has not been furnished as required or the validity period of LoA has expired.”
Responding to CIL's concerns of negative coal balance, the Additional Secretary (Coal) observed that while the issues raised by CIL are appreciated, it has to be noted that under the 'New Coal Distribution Policy', the requirement of genuine coal consumers need to be addressed by state owned coal companies like CIL in accordance with the provisions made in the policy.
CIL has been advised to develop a 'Comprehensive Action Plan' to address the issue of the surging coal demand in the country. It has been suggested by the SLC that the actual coal demand based on various factors including commissioning schedule of capacity, generation target and fuel mix may be worked out on an annual basis by CIL in consultation with the CEA and the Union ministry of power.
