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No surplus coal with subsidiaries of CIL: Government

28 Mar 2012 Evaluate

The government has admitted that there is no surplus coal available with the subsidiaries of Coal India (CIL) and there is a wide gap between availability and commitments made on coal. The Coal Minister, Sriparkash Jaiswal has apprised the lower assembly since the Maharatna company has made commitments through fuel supply agreements (FSAs) and letters of assurance (LOAs) for supply of coal.

The observations have come after the notification issued last month by the Prime Minister's Office (PMO) to CIL directing it to sign FSAs with 80% supply clause before March-end. The FSAs would be signed for power plants that have been commissioned on or before December 31, 2011. In case CIL fails to supply less than 80% of the agreed volume of coal, will be levied with 10% penalty; on the flip side similar amount of incentive will be awarded for supply over 90%, as per the draft FSAs. The FSAs would be signed for full quantity of coal mentioned in the LoAs for a period of 20 years.

The CIL board has already met on March 22, 2012, however, the meeting remained inconclusive as the independent directors felt that the clause of ensuring 80% of supply could not be met. Analysts too are of the opinion that the company may not be able to complete the process by the end of the month. Coal India officials, however, feel it is an achievable task and the March end deadline will be met.

CIL has targeted production of 464 mt during 2012-13 and this will gradually increase to 556 mt by the end of 2016-17. According to initial estimates, if CIL has to supply 80% of the coal requirement, there will be a shortfall of 40 mt during 2012-13. In the next year, the shortfall has been estimated at about 55 mt followed by about 73 mt in 2014-15 and 79 mt in 2015-16.

Coal, the most important fossil fuel in India is vital for its energy security. It is India's least-cost source of primary energy and currently meets two-thirds of the country's energy needs. The power sector is the largest consumer, followed by the industrial sector-the major consumers being steel, cement, and brick-manufacturing units.

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