Coal news and updates

Cement cos seek MoC intervention for renewal of FSAs with WCL

March 28: The Cement Manufacturers Association (CMA) has urged the Ministry of Coal and chairman of Coal India Ltd (CIL) to direct Western Coalfields Ltd (WCL) to renew the fuel supply agreements (FSAs) with cement-makers for a period of five years instead of monthly or yearly renewals with each of the plants.

The association, in a letter to Coal Secretary A K Srivastava and CIL Chairman S Narsing Rao on March 27, has also sought direction so that acceptance of higher grades of coal, ie, from G1 to G4 up to 25% of the total FSA quantity be made optional.

The cement-makers said that, on expiry of their original FSAs, WCL renewed the same on a monthly basis with effect from May 2013 to November 2013 and thereafter on November 21, 2013, WCL, through a notice, extended the FSA period up to one year from the date of expiry of the original FSA, which included the period of renewal, already effected, on a monthly basis.

"WCL's notice on November 21, 2013 is in deviation of the earlier notice dated August 21, 2013 wherein it was stated that the FSAs are being renewed for a further period of five years," CMA Secretary General N A Viswanathan said in the letter.

Viswanathan pointed out that the cement sector is already paying a 35% higher price for FSA coal compared to the regulated price for power grade coal in the G6-G17 bracket.

"Besides, our member units are compulsorily obliged to purchase 25% of the annual contracted quantity falling in the G1-G4 grades, wherever available, after adjusting the entire quantity of the ACQ. In case of non-acceptance of the 25% higher grades of coal by the purchaser, such quantity is being considered as ‘deemed delivery quantity'."

"We have urged the ministry and the chairman of CIL to review the issue for modification of the directives in respect of compulsory acceptance of 25% of higher grades of coal and also for signing of the FSAs for a period of five years," the CMA secretary general said.