If we import, we will pitch for ‘landed cost' formula: Coal India Chief
Feb 23, 2012
The Hindu. Business Line, Kolkata
Ms Zohra Chatterjee, Chairman and Manging Director of Coal India Ltd (file photo). -- A. Roy Chowdhury
Coal India is equipped to supply the fuel requirement of power producers as outlined by the recent directive of the Prime Minister's Office, according to its Chairman and Managing Director, Ms Zohra Chatterji.
She told analysts over a conference call, that, “As of now we need not presume we will import. We are already supplying 80 per cent or more. It will be only signing up something already being done and perhaps redistributing a bit. We will import when the need arises and if at all we import we will pitch for landed cost.”
It was made clear that redistribution would be done in such a way that existing projects get their requirement and quantity supplied above the committed level could be utilised to feed others.
For FSAs (fuel supply agreement) signed prior to 2009, 90 per cent supply was assured and in cases 94-95 per cent is being delivered. This additional quantity in excess of the 90 per cent trigger mark could see diversion provided logistics were in place.
Ms Chatterji said for 2012 -13, the company was targeting 464 million tonnes (mt) of production and 556.50 mt in 2016-17 in “business as usual” scenario. However, if clearances were obtained for upcoming projects the company could produce 615 mt, she said.
Coal production had dipped in the second quarter due to unprecedented rains but had improved in January and February.
During the third quarter ending December 2011 the offtake had enhanced to 110 mt as against 93 mt in the second quarter.
In January, there was an increased availability of rakes. A meeting had been held with the Environment Ministry and it had assured Coal India of fast-tracking approvals, particularly for capacity addition in mines that were operational. “Importantly, the PMO will be closely looking at coal projects and we expect all ministries to fast-track their clearances,” she said.
Production will be increased by 20 mt to 25 mt per year from ongoing and new projects that come online.
On Assured supply
On quantity committed under letter of assurances (LA), the Coal India management said it was 423 mt of which 273 mt would be in the 12th Plan. The remaining would spill over to the 13th Plan. However, this was besides 306 mt supply based on LAs inked prior to 2009. LAs signed prior to 2009 were eligible for 90 per cent supply.
Out of the 423 mt projected, for FY12-13 alone it would be about 115 mt on record. However, demand would be less as 20-30 per cent of projects were expected to be delayed.
Even for the 273 mt, no FSA had been signed and only when FSAs are signed, will the penalty clause for non-supply below 80 per cent kick in. As such, Coal India has been supplying close to 80 per cent of the requirements for the LAs so far, they said.
Ms Chatterji said from there was a two-year window for power stations from the date of signing of LoAs and drawing up of the FSA and delay could warrant cancellation. So far, no such cancellations had taken place and given the demand a stringent view could be exercised on delays.
Experts said 80 per cent supply could lead to about 76 per cent plant load factor and for projects to raise their PLF they would have to source the deficit 20 per cent if Coal India did not address their balance requirement.