Advise CIL to supply fuel at notified price: PowerMin to CoalMin

Tags: News
Cautioning that an increase in the cost of coal would result in more expensive electricity, the Power Ministry has asked its coal counterpart to advise CIL to supply fuel at the company's notified price.

"Projects of 4,660 MW capacity and other similarly placed projects are being offered coal by CIL (Coal India Ltd) on 'as is where is' basis under the MoU route. Lifting such coal involves additional handling and transportation cost on the part of power project developers," Power Secretary Pradeep K Sinha said in recent letter to Coal Secretary S K Srivastava.

In addition, coal companies (CIL subsidiaries) are charging project developers 40% premium over CIL notified price for supply of coal. Coal companies are also charging a premium of 20% over CIL notified price for coal supplies to tapering linkage holders, Sinha said.

"Power companies are already facing difficulty in scheduling power due to high cost of power and any increase in cost of coal would only aggravate the problem leading to increase in the cost of power supplied to the common consumer," the Power Ministry said.

Sinha asked the Coal Ministry to advise CIL to issue suitable instructions to its subsidiaries so that coal may be supplied under FSA and MoU routes at CIL notified price only, "to the extent of valid long term PPAs (Power Purchase Agreements) with Discoms."

"Similarly, the linkage holders as well as tapering linkage holders should also be charged CIL notified price only for coal supplied to the extent of valid long-term PPAs with Discoms," it said.

Coal is the mainstay of country's energy programme as 70% of power generation is dependent on the dry fuel.

Coal India accounts for over 80% of the domestic coal production.

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