The Center has decided that the coal which is used for blending purposes by domestic coal-fired power plants to nil in the current fiscal year and has asked state-owned CIL to enter into a deal with power generation firms for domestic coal supply.
"Several initiatives are being taken for supply of domestic coal as import substitution and the same has been deliberated in the meetings held on April 4 in the Ministry of Coal and in the Ministry of Power chaired by Additional Secretary Power" Coal India Ltd (CIL) said in a letter to its subsidiaries.
"It has been decided to bring the level of import of coal for the purpose of blending by the domestic coal based power plants to zero level in this fiscal," it said.
The country has an abundance of domestic coal and is struggling with a slump in demand for dry fuel.
"It was also decided in the said meeting to tie up the long-term requirement of import substitution through MoU. Accordingly, the supply of coal through import substitution, a model MoU has been prepared, which has been legally vetted," CIL informed its arms.
"The MoU will be an integral part of the fuel supply agreement. Performance incentive as well as other provisions including compensation for short supply/lifting shall be dealt as per FSA provisions," CIL said.
In addition, the Central Electricity Authority (CEA) will issue instructions to all such power plants / power generation companies to sign a Memorandum of Understanding ( MOU) with coal companies and ensure that dry fuel is supplied to such power sector units over and above their fuel supply agreement (FSA) entitlements.
Under the FSA, fuel supplies are governed by legally enforceable agreements between the seller (coal companies) and the consumer under specific terms and conditions.
On 28 April, the Ministry of Power issued an advisory to generators to reduce imports of coal and replace it with domestic coal.
The country imported 247.1 million tons (MT) of coal in the period 2019-20, around 5% higher than the 235.35 MT imported in the period 2018-19.
Previously, Coal Minister Pralhad Joshi had written to the Chief Minister of State asking them not to import dry fuel and take domestic supplies from CIL, which has abundance of fossil fuels.
In order to raise demand for energy, the government has previously announced a range of steps, such as increased availability for connecting customers. Several relief measures have also been declared for users of CIL, including the power sector.
The PSU closed the financial year 2019-20 with a coal production of 602.14 MT compared to the target of 660 MT.
It is targeting 710 MT of coal production in the current financial year.
