Coal news and updates

The curious case of KSK Mahanadi’s FSA abstinence!

September 10: At a time when coal is a fiercely debated and scarce commodity and the entire power sector is in a tizzy over the impending shortfall in its fuel stocks, the recent meeting of the Standing Linkage Committee-Long Term (SLC-LT) noted the curious case of KSK Mahanadi whose third unit of 600 MW is supposed to receive coal from Eastern Coalfields (ECL) through the tapering linkage procedure.

In this case, ECL’s grouse is that the consumer is not signing the FSA!

In fact, no company representative was even present at the SLC-LT meet!

It may be noted that KSK Mahanadi is part of the nine units identified by the Cabinet Committee on Economic Affairs (CCEA) under the 78,000 MW of power to be generated in India and for which it was decided in June 2013 that fuel supply agreements were to be signed between Coal India and the respective units.

However, KSK Mahanadi’s unit was among the nine whose coal block development was delayed because these fell in the Go-No-Go areas of the Ministry of Environment & Forests (MoEF). These nine units emerged as a distinct category since they were impacted by a government policy that came into effect subsequent to the allocation of the coal blocks to them.

Consequently, the CCEA had decided that these power units would be provided tapering linkages -- subject to the maximum approved percentage of domestic quantity as indicated in the Presidential Directive dated July 17, 2013 – for a period up to September 30, 2016 or till such time production actually starts from the blocks, whichever is earlier.

Hence, CIL had to enter into FSAs with these nine units. The CCEA had further indicated that the FSA conditions would be reviewed every six months starting March 2015 and revised, if required, and that no further extension of the tapering linkage would be provided, except in exceptional circumstances.

However, CIL officials complained that till date the consumer has not signed the FSA and, consequently, the matter has been deferred.