Coal news and updates

CIL confident of meeting coal demand from power sector

September 17: Coal India Ltd (CIL) is confident of meeting its commitment relating to supplying enough coal to power plants despite some impediments in increasing coal production to desired levels as it feels all the planned power plants may not be operational as per schedule or will not have power purchase agreements (PPAs) in place, a top official from the company told ICMW.

The company had been asked by the Ministry of Coal to sign fuel supply agreements (FSAs) with a total of 173 plants for a total generation capacity of 78,000 MW, but it has, till September 16, signed 144 agreements for generation capacities of around 66,000 MW.

The materialisation of FSAs to the extent of 66,000 MW capacity is slightly more than the company's expectation.

"The 78,000 MW is based on certain presumptions and projections. We believe that, given constraints like transmission networks not being in place at some places and also some of them facing certain other constraints, some plants may or may not materialise. Also, there are issues related to PPAs," CIL's Chairman & Managing Director S Narsing Rao said in an interview to ICMW.

"Keeping in mind all those things, I have a feeling that we may not really go beyond 60,000 MW in effect though we may be signing FSAs for 78,000 MW," Rao said.

He further said that as per the condition put in place following the second presidential directive, in order to be eligible to get 65% of domestic coal from CIL through FSAs, the plants should be commissioned before March 31, 2015.

"Now that we have around one-and-half years of time left, I don't really feel it would go beyond 60,000 MW, but let's see what happens," Rao said.

"Our business model is based on a projection of 60,000 MW, but if it goes beyond that, we have kept some windows open to re-negotiate that percentage of 65%. So let us see, it is too early to say," the CMD added.

"As on today, out of 60,000 MW, roughly 40,000 MW has materialised, ie, we are supplying coal to close to 40,000 MW capacities and now we have to see in the next one-and-half years whether 20,000 MW additional capacities get, the PPAs are in place and the plants are able to generate and transmit. Whether it will be 20,000 MW, more or less, we will have to wait and see what will be the situation in the next 14-18 months," Rao said.