Coal India Ltd.

Coal India (CIL) has rebuffed to supply to power plants commissioned since December 2011. The move is set to stall investment worth Rs 40,000 crore in new power capacity of 8,156 Mw. This includes a 300-Mw unit of Reliance Power’s Rosa power plant in UP and a 660-Mw plant of China Light & Power (CLP) at Jhajjar, Haryana.

CIL’s fresh notification is despite Prime Minister Manmohan Singh’s diktat in February, followed by the President’s order in April, asking the company to meet at least 80 per cent of the coal supply to 50,000-Mw capacity plants to be commissioned up to 2015, including 26,000 Mw commissioned by December 2011.

However, this move comes in the wake of April 19 circular issued by CIL’s subsidiary, Central Coalfields. The circular stated the rake movement plan would be accepted only from plants that had signed fuel supply agreements (FSAs). The circular has left power companies in a high and a dry state, as these were hopeful of receiving coal under the existing memorandum of understanding (MoU) route until FSAs were signed.

This could bring power companies under pressure, as these are unwilling to sign FSAs in their current form, with a low-penalty level. Power companies give a rake movement plan to CIL, the coal ministry and the rail ministry a month before tying up necessary evacuation facilities for coal transport to plants.

Country's largest power producer NTPC, which is supposed to sign the FSA for additional supply of about 25 million tonne for capacity addition between 2009 and 2012, refused to ink the pact on the issue of quality of coal. CIL, meanwhile, has entered into fuel supply pacts with five power firms for minimum assured supply of coal as per the directive, which include the likes of Lanco Anpara Power and Bajaj Hindustan.