PVT power projects may get CIL supplies

Coal India has offered supplies to all private power units with which the company has not signed fuel supply agreements

The country’s largest coal producer, Coal India (CIL), has offered supplies to all power units that don’t feature in the list of entities with which the company has to sign fuel supply agreements (FSAs) under a Presidential directive, but are commissioned and need immediate coal linkage to start power generation. The move will benefit 8,240 MW of power projects of companies such as Adani, GMR, Monnet, Essar, Bajaj Hindustan. These projects are either already commissioned or ready for commissioning, but do not have any fuel linkages. They are worth about R43,671crore.

As per a decision of the Cabinet Committee on Economic Affairs and a subsequent Presidential directive, CIL has been asked to sign FSAs for 78,000 MW by September 6. The CCEA also asked it to provide coal to another 4,660 MW of power projects — and other similarly placed projects — that do not have any linkages, on the condition that this additional supply should not impact supply to identified projects.

“We have studied actual coal supplies for the current fiscal (2013-14) under the new FSA, and found that after meeting all commitments, we still should have surplus to meet needs of all unlinked power projects identified by the government. An offer has already been made to them to sign non-binding MoUs for coal supplies on an annual basis,” said a senior CIL official who did not want to be identified.

"Though we were told that unlinked projects worth 4,660 MW could be looked at if any coal was left, the company has done its calculations and is ready to meet its entire annual requirement of 8,240 MW of power projects identified by the power ministry," the official added.

As per the list of projects submitted by the power ministry to the Cabinet Committee on Investment (CCI), Adani Power Rajasthan's 1,320-MW Kawai project stands the best chance to get coal under this route. One of the project’s two 660-MW units is already commissioned and the second is likely to be commissioned in four months.

The other projects that do not have coal linkages but are nearing completion are Bajaj Hindustan’s 1,980-MW Lalitpur Power project in Uttar Pradesh, Adani Power Maharashtra’s 1320-MW project at Tiroda, GMR Chhattisgarh’s 1,370-MW project in the state, Essar Power MP’s 1,200-MW Singrauli project and Monnet Power Company’s 1,050-MW Malibrahmani project in Angul, Orissa.

“All these would get coal for their requirement this year, and supplies in subsequent years would depend on availability. The supply agreements with these companies would be non-binding and revised every year without provision for incentive or penalty under the terms of new FSAs that will be signed with the 78,000 MW power projects,” a coal ministry official said.

“This is a very good development and it can revive private sector investment in power projects,” said an official of a private sector generator that is likely to benefit from the move.

It is understood that CIL should be able to meet coal demand of a large number of projects as it would need to meet fuel needs of only 40,000 MW of capacity under the terms of the new FSA this fiscal (2013-14). The balance 38,000 MW capacity is yet to tie up supplies under long-term power purchase agreements (PPAs) with beneficiaries, a pre-condition for the coal major to start coal supplies.

The domestic coal requirement for 78,000 MW works out to about 182 mt while CIL has estimated availability of only about 104 mt for new projects from domestic sources. But with the lower 40,000 MW projected now, CIL may need just about 90 mt to meet its commitments under the terms of the Presidential directive. It is, therefore, also willing to support additional power capacity.

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