Coal India Ltd (CIL) has informed power producers that it can assure only 60 per cent of supply and would "gradually" reach the 80 per cent mark in the coming years, an announcement seen as a setback to thermal plants facing fuel shortage.
The Prime Minister's Office, in March, had asked CIL to sign Fuel Supply Agreements (FSAs) with power generation companies at minimum supply level of 80 per cent of total requirement.
Under the pact with power companies, the coal producer will have to commit itself to supply at least 80 per cent of the fuel to these users.
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"Coal India is saying 80 per cent coal supply to power plants is not possible, they can only supply up to 60 per cent and would increase it to 80 per cent in the next four years," a Power Ministry official said.
This proposed arrangement would be applicable for thermal power plants commissioned after March 2009.
Meanwhile, the Power Ministry is insisting on a minimum supply level of 65 per cent, if CIL finds its difficult to meet the mandated commitment of 80 per cent.
"At least 65 per cent (supply) should be there, failing which Coal India should be penalised...and it should ramp it up to 80 per cent in the next four years," the official said.
At present, 14 power utilities have signed the FSAs with CIL.
"The spirit of the directive was to arrest the uncertainty of coal supply to power plants," the official said.
On the other hand, CIL has suggested a 0.01 per cent penalty on not delivering the fuel in time, but the penalty would only be applicable after three years of signing the pact.
NTPC and many other power companies have refused to ink fuel supply pacts with CIL, disagreeing with introduction of some clauses in FSAs.
CIL, which produces 436 million tonnes at present, plans to enhance its capacity to 464 million tonnes by the end of the current financial year (2012-13). It has also earmarked a supply of 347 million tonnes for the power sector.
With PTI inputs