Power Ministry mulls coal imports to meet supply shortage.

The Power Ministry is likely to move a proposal this week to Coal India for importing the dry fuel to bridge the shortfall in supply under fuel supply agreements (FSAs).

Central Electricity Authority (CEA) is working on a proposal along with the Power Ministry to work out a mechanism for importing coal, a source close the development told PTI.

As per the Presidential Directive to Coal India, the PSU has to supply a minimum 80 per cent of the requirement to power companies. But Coal India has expressed inability in delivering that quantity due to low production.

"To meet the gap between the 80 per cent level and whatever quantity Coal India can deliver, the remaining (quantity) can be imported by Coal India," the source said. Prices of imported coal and domestic fuel would be pooled to supply coal at an average price to power generation utilities.

However, the proposal is at a nascent stage and requires assent from various stakeholders.

"Coal India has stated in one of the meetings that it cannot supply 80 per cent of the directive quantity due to production constraints at its mines," the source said, adding that "but it (Coal India) also said that it can reach the 80 per cent mark in the next four years.

Coal India is believed to have made a presentation to the Ministries of Power and Coal, in which the company stated that it can assure 60-65 per cent supply in the first year, 50-55 per cent in the second, 58 per cent in the third and 80 per cent in the fourth year.

The Prime Minister's Office, in March, had asked Coal India to sign Fuel Supply Agreements (FSAs) with power generation companies at minimum supply level of 80 per cent of total requirement.

Under the pact with power companies, the coal producer will have to commit itself to supply at least 80 per cent of the fuel to these users.

While, Coal India has suggested a 0.01 per cent penalty on not delivering the fuel in time, but the penalty would only be applicable after three years of signing the pact.

NTPC and many other power companies have refused to sign the FSAs with Coal India, as they are not in agreement with the company over certain clauses in the pact. So far 14 power firms have signed the FSAs with Coal India.

At present, Coal India produces 436 million tonnes of the fuel and plans to enhance this capacity to 464 million tonnes by the end of the current financial year (2012-13). It has also earmarked a supply of 347 million tonnes for the power sector during the period.

Source : profit.ndtv.com