Coal India removes limit on procurement for power generation units
Kolkata: State-owned miner Coal India Ltd (CIL) has removed all limits on the amount of coal power generation units can procure, allowing plants with fuel supply agreements (FSA) to acquire as much coal as needed.
This is a departure from the previous system, where coal was supplied based on the annual contracted quantity (ACQ) agreed with each power plant.
In a statement on Tuesday, CIL said, "We have opened the door for supplying coal beyond the ACQ to thermal power plants across the country, including independent power plants (IPPs) or privately owned units. This applies to gencos with FSAs that include this enabling clause.”
The statement also mentioned that in late June, CIL’s board approved removing supply caps beyond the ACQ to promote "ease of doing business" and streamline processes. Coal will be supplied at the same price as outlined in the FSAs, according to a CIL executive.
Earlier, CIL allowed coal supplies up to 120 percent of the ACQ to power plants and IPPs.
The ACQ concept was first introduced in 2007 under the New Coal Development Policy, initially capping coal supply at 80-90 percent of a power plant’s needs.
This threshold was raised to 100 percent in 2022-23 and further to 120 percent in 2023-24 due to CIL’s surplus coal availability.
The company emphasized that the new policy will benefit power plants looking to obtain more coal than their ACQ allows, while also enabling CIL to increase its coal supply at a time when demand is showing signs of slowing down.
This simplification is expected to benefit power plants and boost CIL’s coal supplies.
CIL currently has a coal stock of 72 million tonnes at its pitheads, a 47 percent increase from the 49 million tonnes on hand as of August 12, 2023.
The national average coal stock at power plants has reached a 14-day supply, an unusually high figure for the monsoon season.
At present, coal-generated electricity meets 75 percent of India’s power demand. In recent years, India’s power demand has been growing by 6-8 percent annually, with this incremental demand being met primarily by thermal power units.
In 2023-24, CIL supplied 101.6 percent of the projected coal demand, marking a 5.4 percent increase in coal supply over the previous year.
CIL has long-term linkages with 127 of the 153 domestic coal-based power plants in the country, covering 592 million tonnes, including 50 IPPs.
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