Ending a months-old tussle, NTPC and CIL have reached an agreement over supply of coal following the Central Electricity Authority’s intervention.
As part of the pact, CIL would supply 90 per cent of the domestic coal requirement of NTPC. A Fuel Supply Agreement (FSA) in this regard would be signed by the two PSUs in January next year, Minister of State for Power Jairam Ramesh said here.
According to the agreement, Coal India Ltd would supply coal to NTPC’s new power plants, enabling them to operate at 90 per cent Plant Load Factor (PLF), or else the power producer could trigger the penalty clause against CIL.
“The Central Electricity Authority (CEA) has suggested a compromise that the new power projects of the companies will get an assured supply of coal to operate the plant at 90 per cent Plant Load Factor (PLF),” Ramesh said, adding that the first round of FSA between CIL and NTPC would start from January 1, 2009.
Once NTPC and CIL enter into an FSA, other state utilities would also follow to have similar agreements, the minister said, asserting that this would resolve the shortage of coal to a large extent.
The Union power ministry is importing 20 million tonnes of coal in this financial year, NTPC is importing eight million tonnes and CIL, for the first time, is importing four million tonnes of coal. But the long-term reliance on coal imports is not likely to solve the problem of fuel shortage.
“To think imported coal is the solution to fuel shortage problem is unrealistic as equipment at most of the power plants are not designed to use the blend of imported and domestic coal,” the minister said.
Earlier, CIL had guaranteed 60 per cent of the supply of fuel to the power utilities against their demand of 90 per cent. NTPC had refused to sign the FSA unless it was assured 90 per cent fuel supply.
The new coal distribution policy makes its mandatory for the companies requiring over 4,200 tonnes of coal annually to enter into an FSA with CIL.
Out of the 1,400 companies from power, steel, cement and sponge iron sectors, nearly 1,100 are believed to have entered into FSAs with Coal India.
CIL had earlier said that NTPC's demand was unjust, but following CEA's intervention the matter has been resolved.
The last date for signing of the FSA for non-power utilities was July 31, but for power companies it was extended to November 30.
Meanwhile, in a letter to Prime Minister Manmohan Singh, some Members of Parliament asked him to ensure transparency by awarding coal linkages only to priority projects, which had funds tied up.
The Union coal ministry had given fuel linkages to power projects having a combined capacity of over 60,000 Mw. Many of them have not even started construction and would not be able to do so during the Eleventh Plan.
