Coal India issued another Presidential directive over fuel pacts

Coal India Ltd (CIL) has been issued another presidential directive by the government to enter into fuel supply agreements (FSAs) with power plants for a capacity of 78,000 MW.

Last year too, the coal ministry had issued a directive to the PSU to sign FSAs with the power producers, assuring them of at least 80 per cent of the committed coal delivery.

A coal ministry official confirmed on Friday: "The government had this week issued presidential directive to Coal India for FSAs for 78,000 MW."

Of the 78,000 MW, supply of coal to 60,000 MW capacity plant has already been agreed. The additional capacity of 7,000 MW would get assured supply of fuel and 11,000 MW would be cases of tapering (short-term) linkages.

The development follows the Cabinet Committee on Economic Affairs (CCEA) in June asking the state-owned coal miner to sign FSAs for a total capacity of 78,000 MW, including cases of tapering linkage, which are likely to be commissioned by March 31, 2015.

Actual coal supplies would, however, commence when long-term Power Purchase Agreements (PPAs) are tied up.

"In the interim period, there is no option but to import some coal. Imported coal is costlier than domestic coal. We are guaranteeing 65 per cent this year to 75 per cent by the end of 12th Plan (by Coal India) for each of these 78,000 MW capacity," a coal ministry official had earlier said.

CCEA had in June allowed power companies to pass on the cost of imported coal to consumers.

With inputs from PTI