The proposed development in line with the Centre’s recent directive to reduce coal import along with utilization of excessive stock available with the company
New Delhi, August 22: The Coal ministry has approved CIL’s plan to supply 100% of the normative requirement to thermal power units, given the excessive coal stock available with the company, and recommended increasing the ‘annual contracted quantity’ (ACQ) of coal to 100% of the normative requirement of a non-coastal plant from 90 earlier, along with an increase in ACQ of 70% for coastal plants.
The normative requirement is the coal demand of a thermal power station based on its capacity, heat rate, boiler specifications and subsequent coal usage. Normative requirements are different for every thermal power station.
The decision of the coal ministry pertains to coal supply both under long-term agreement signed with CIL and coal supply linkage via the auction route. CIL periodically holds auctions of coal for the power and non-power sectors for short-term and medium-term coal supply contracts.
One of the many points of the meeting held this week stated: “In view of the request by CIL and recommendations of the ministry of power, the standing linkage committee (of the ministry of coal) recommended to increase the ACQ up to 100 per cent of the normative requirement”, the committee further stating, “In case coal supply linkages are obtained through auction, the entitled quantity will be revised based on the new norms”, while also adding that consumers will have to participate in auctions to obtain linkages for the increased entitlements of ACQ.
CIL, while stating in the above mentioned meeting that it had sufficient stock of coal amid slugging demand from the non-regulated sector (such as iron and steel, among others) due to Covid-19, also said, “CIL has decided to enhance the ACQ up to 100%. This dispensation would be allowed to interested power plants on an optional basis. They will have to undertake that they would reduce imports to the extent of an increase in the ACQ.”
The proposed development is in line with the Centre’s recent directive to reduce coal import. CIL had launched a special category e-auction of coal last month for those companies and traders which import coal to meet their requirements. The company also informed the ministry about around 700 million tonnes of coal being available with CIL in the current financial year, stating further that the production from next financial year would be in accordance with the plans to achieve the 1 billion tonne coal production target by 2024.
“Furthermore, the impact of enhancement of ACQ would be that around 15 million tonne more coal would be committed to power producers. It was stated that CIL has waived off the levy of performance Incentive (PI) for the first two quarters of 2020-21. This would also enable it to implement the coal import substitution as coal quantities above the ACQ level can be supplied without charging additional cost in the form of PI”, CIL said.
