CIL to focus on raising coal output; imports not a priority

Days after a direction from the PMO to make adequate coal supplies to power producers on its own or through imports, state-owned Coal India Ltd (CIL) on Friday said it will focus on increasing production, rather than imports.

"Our focus and outright effort would be to expand production... We have coal reserves of 68 billion tonnes and it's only a question of how fast we can mine it," Coal India's acting Chairperson Zohra Chatterji said.

She added that the company has stayed away from importing coal in past as it could not get a firm demand from power producers then.

Chatterji also said "It is not known if the (power) utilities will come up with firm demands now or they will sign agreements to accept shipments at imported prices."

The Prime Minister's Office (PMO), on February 15, had announced that the CIL would sign 20-year fuel supply pacts with power plants that have been commissioned or would get commissioned on or before March 31, 2015.

This included signing of sale agreements with the plants that have been commissioned by December 31, 2011, by March-end.

The move was to provide relief to power units with estimated capacity of 50,000 MW, the PMO had said.

Due to fall in production, Coal India has not signed any fuel supply agreements since March, 2009 and has been offering only 50 per cent as guaranteed supply against the contracted quantity with the power producers.

This has affected various power projects and the issue was raised by the industry leaders including Ratan Tata, Anil Ambani, Gautam Adani, in their meeting with Prime Minister Manmohan Singh last month.

Chatterji, who is also the Additional Secretary in the Coal Ministry, said, the CIL has so far not received any communication from the government on the PMO decision.

Ministries of power and coal are working together to prepare a list of projects that require coal, although she declined to comment on whether there will be pooling of prices, if the company goes for imports, she further said.

Asked whether the CIL would divert coal reserved for spot sales (done through e-auctions) to meet the demand of the power sector, Chatterji said that it will remain at the current levels as there were very few takers when the company had gone for a similar move in October.

CIL has been attributing fall in production to lack of environmental clearances to their projects.