Coal India may divert coal under e-auction to power firms

To meet fuel supply commitments to the power sector, the government today said CIL might divert a portion of the coal meant for e-auction to power plants.

"... Coal India Ltd (CIL) may reduce coal meant for e- auction from 10 to 7 per cent of its production progressively till the end of the 12th Plan," Minister of State for coal Pratik Prakashbapu Patil said in a written reply to Lok Sabha.

The decision, Patil said, was taken following a meeting held in Prime Minister's Office to discuss the issues relating to coal shortage and finding out ways to meet the requirement of the fossil fuel of the power sector.

Last month, Coal Minister Sriprakash Jaiswal had also said that it may divert a portion of the fuel under e-auction quota to power producers, besides resorting to imports to meet the crisis of the dry fuel.

Under e-auction, coal is sold at spot market price. Around 10 per cent of the total coal produced by the state-owned firm is sold through e-auction.

In order to provide relief to the fuel-starved power sector, last month it was decided that CIL will sign by March end agreements for supply of fuel to power projects commissioned up to December 2011.

The decision, which addresses long-standing tussle between the state-controlled coal sector and private power producers, is an outcome of the meeting of Committee of Secretaries (CoS) constituted by the Prime Minister to look into issues impacting the power sector, held on February 1.

During that meeting, it was agreed that CIL would sign Fuel Supply Agreements (FSAs) with power plants that have entered into long-term Power Purchase Agreements (PPAs) and have been commissioned or would get commissioned on or before March 31, 2015.

"For power plants that have been commissioned up to December 31, 2011, FSAs will be signed before March 31, 2012," the Prime Minster's Office had said in a statement.

Further, the FSAs would be signed for full quantity of coal mentioned in the Letters of Assurance (LoAs) for a period of 20 years. If the supply is below 80 per cent, then Coal India would be penalised whereas in case the supply is above 90 per cent, the company would be provided incentive.

In case, Coal India is unable to meet the obligations, the company would have to arrange for fuel through imports or other arrangements, the statement had said.