Coal India Ltd Lifts Coal Procurement Limits for Power Plants
Date: August 14, 2024, 12:18 AM IST
Updated: August 14, 2024, 12:18 AM IST
National miner Coal India Ltd (CIL) has removed all restrictions on the amount of coal that power generation units can procure. This move permits power plants with fuel supply agreements (FSA) to acquire unlimited coal, a notable shift from the previous system where coal supply was based on annual contracted quantity (ACQ).
CIL announced the decision on Tuesday, stating: "CIL has paved the way for allowing supplies beyond ACQ to thermal power plants, including independent power plants (IPPs) or privately owned units, provided FSAs encompass such a provision."
The company’s board approved the removal of supply caps in late June to enhance business efficiency and simplicity, according to a CIL statement. The coal prices will remain as specified in the FSAs.
Historically, CIL allowed coal supplies up to 120% of the ACQ. The ACQ concept was introduced under the New Coal Development Policy in 2007, capping supply at 80-90% of a plant’s needs. This cap was increased to 100% in 2022-23, and further to 120% in 2023-24 due to surplus availability.
The policy change aims to benefit power plants needing more coal than their ACQ while enabling CIL to boost its coal supply amidst slowing demand.
In an interview last month, CIL Chairman and Managing Director P M Prasad emphasized that maximizing sale volumes is crucial for revenue growth, due to fixed major costs. CIL’s current coal stock at pitheads stands at 72 million tonnes, a 47% increase from August 2023.
Coal-generated electricity currently meets 75% of India’s power demand. With annual power demand rising by 6-8%, thermal power units have been fulfilling this incremental growth. In 2023-24, CIL supplied 101.6% of the projected coal demand, marking a 5.4% increase over the previous year.
CIL has long-term coal supply agreements with 127 out of 153 domestic coal-based power plants in India, covering 592 million tonnes of coal, including 50 IPPs.
Original Story https://www.business-standard.com/industry/news/buy-as-much-coal-india-removes-all-restrictions-on-coal-purchase-124081301516_1.html
Category :
Tags:
