For the current fiscal year, Coal India Limited (CIL) has raised the minimum assured commitment level of coal supply – known as the trigger point – to 80 percent from the existing 75 percent annual contracted quantity (ACQ) to energy sector consumers covered by Fuel Supply Agreements (FSAs).
This refers to those FSAs for which the trigger level was set at 75%. All CIL coal-producing subsidiaries have been told to enforce the increase immediately.
The amendment to increase the trigger level to 80 percent of the provisions of the current ASF is made by means of a side agreement.
“Raising the trigger level to 80 percent is targeted towards power generating companies requiring more coal” said an official of the company.
“The aim is to encourage power plants to opt for domestic supply of coal and steer them away from imports to the extent possible”, the official added.
CIL's FSAs with power utilities have a capacity of around 560 million tons ( mt). Among these, 270 mt among FSAs are power plants commissioned prior to the New Coal Distribution Policy (NCDP) policy, with a trigger point of 90% of the ACQ.
And for those FSAs, which amounted to 290 mt commissioned post NCDP, the trigger level was 75 percent of the ACQ, which has now been increased to 80 percent.
According to the CIL official, if all eligible power utilities agree to increase to 80 percent of the trigger level, the FSAs could see an increase of more than 14 mt for the current fiscal year.
Coal stock is currently at an all-time high of 75 mt at pitheads, increased output expected for 2020-21, ensuring more domestic coal to power plants operating at a higher level of plant load factor, and providing relief to the power sector during the Corona pandemic prompted the Maharatna coal mining monolith to raise the trigger price.
Coal suppliers are encouraged to increase the amount of supply to power plants as supplies are less than 80 percent of the agreed trigger level would attract payment of the penalty for the quantity supplied less. In the same way, power generators are also encouraged to increase the lifting of domestic coal under the FSA.
In the midst of the economic crisis created by Covid-19, Coal India has stepped up a number of consumer-friendly relief measures, including an extension of the time limit for payment of coal until 21 April; an extension of the period of validity for the removal of coal in all auctions without penalty; continued supply of coal despite defaults on payment by State and Central Generating companies and others.
