Apprehending it would not
be in a position to meet the total requirement of the power sector,
Coal India (CIL) today projected the shortfall at 10-15 per cent of the
committed supply to firms under fuel supply agreements (FSA).
The PSU "was expecting a shortfall (domestic) of 10-15 per cent from their supply trigger quantity of 80 per cent as per FSAs required to be signed," CIL Chairman and Managing Director S Narsing Rao today said after the fourth quarter results.
He, however, clarified that the situation would arise only when all the FSAs are signed and companies lift the projected quantity.
The development comes close on the heels of the state-run PSU informing the Coal Ministry that there might be a shortfall in the supply of coal to the power producers.
As of now, CIL has entered into pacts with 14 power firms only out of 49, as some of the firms, including NTPC, refused to sign FSAs due to objections to certain clauses, including a provision of 0.01 per cent penalty on the value of the coal not supplied by the PSU, which they say is almost negligible.
Rao said CIL may resort to imports to meet the demand shortfall of power firms.
"CIL will take up the import route to meet the gap, only if customers insists for this and pay import parity price," he said.
Hypothetically, the import quantity could go up to 50-60 million tonnes assuming a shortfall of 10-15 per cent based on supply trigger quantity of 80 per cent as per the agreement.
In April, the government had issued a Presidential directive to CIL to enter into FSAs with power firms, ensuring that they would get at least 80 per cent of the fuel contracted for. The move followed power firm honchos seeking Prime Minister's intervention for assured fuel supply for their plants.
However, despite the projected 10-15 per cent supply deficit, CIL is projecting 347 million tonnes of coal supply in 2012-13, up from 312 million tonnes, to the power sector.
In 2012-13, the PSUs' total production target is 464 million tonnes.
Some CIL directors pointed out that all power firms identified for signing FSAs may not enter into pacts with the company, failing to fulfil the criteria, and thus the shortfall would not be significant.
Rao expects the deadlock withe NTPC will be resolved soon, but he did not elaborate on it. It had refused to ink FSA with CIL, disagreeing with introduction of new clauses.
The new FSA states, however, that CIL will not be liable to pay penalty for the first three years (from the date of signing the pact) even if there is supply shortfall.
The PSU "was expecting a shortfall (domestic) of 10-15 per cent from their supply trigger quantity of 80 per cent as per FSAs required to be signed," CIL Chairman and Managing Director S Narsing Rao today said after the fourth quarter results.
He, however, clarified that the situation would arise only when all the FSAs are signed and companies lift the projected quantity.
The development comes close on the heels of the state-run PSU informing the Coal Ministry that there might be a shortfall in the supply of coal to the power producers.
As of now, CIL has entered into pacts with 14 power firms only out of 49, as some of the firms, including NTPC, refused to sign FSAs due to objections to certain clauses, including a provision of 0.01 per cent penalty on the value of the coal not supplied by the PSU, which they say is almost negligible.
Rao said CIL may resort to imports to meet the demand shortfall of power firms.
"CIL will take up the import route to meet the gap, only if customers insists for this and pay import parity price," he said.
Hypothetically, the import quantity could go up to 50-60 million tonnes assuming a shortfall of 10-15 per cent based on supply trigger quantity of 80 per cent as per the agreement.
In April, the government had issued a Presidential directive to CIL to enter into FSAs with power firms, ensuring that they would get at least 80 per cent of the fuel contracted for. The move followed power firm honchos seeking Prime Minister's intervention for assured fuel supply for their plants.
However, despite the projected 10-15 per cent supply deficit, CIL is projecting 347 million tonnes of coal supply in 2012-13, up from 312 million tonnes, to the power sector.
In 2012-13, the PSUs' total production target is 464 million tonnes.
Some CIL directors pointed out that all power firms identified for signing FSAs may not enter into pacts with the company, failing to fulfil the criteria, and thus the shortfall would not be significant.
Rao expects the deadlock withe NTPC will be resolved soon, but he did not elaborate on it. It had refused to ink FSA with CIL, disagreeing with introduction of new clauses.
The new FSA states, however, that CIL will not be liable to pay penalty for the first three years (from the date of signing the pact) even if there is supply shortfall.
Source: Economic Times
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