Coal India starts supplies to power plants under auctioned linkages

26th March 2018 By: Ajoy K Das - Creamer Media Correspondent

KOLKATA ( – State-owned miner Coal India Limited (CIL) is expected to supply an estimated 27-million tons a year to thermal power companies through long-term supply agreements secured through bidding.

Long-term coal allocation was put up for auction for the first time in September and thermal companies successful in winning the bids will now receive assured supplies of the dry fuel as per their plant requirement.

According to a CIL official, despite the delay in starting supplies, the miner and thermal power companies have now completed signing of fuel purchase agreements and that coal supplies to ten thermal power companies will start over the next few days.

The Coal Ministry introduced long-term supply linkage auctions to provide feedstock to thermal power companies that have electricity sale agreements with distribution companies, but do not have a captive coal source or have not been able to sign long-term supply agreements.

Meanwhile, in a related development, the Coal Ministry under special provisions for preferential allotment to government companies, has allotted 11 coal blocks to CIL that will add an estimated 225-million tons a year of incremental production to the miner.

Five of the newly allotted mines are located in the eastern Indian province of Jharkhand. CIL subsidiaries Eastern Coalfields will operate three mines and Bharat Coking Coal the other two.

Bharat will also operate two blocks in Bihar, while another CIL subsidiary, Western Coalfields, will operate four blocks in Odisha.

The Coal Ministry reckons that the new coal blocks will enable CIL to reverse the miner’s sluggish production growth of recent months.

During April 2017 to February 2018, CIL production was reported at 495.09-million tons, a modest 1.4% growth over corresponding previous period and missing the government target of 531.32-million tons.

The Ministry expects that the allocation of new coal blocks will help to boost the production growth rate to 8.3% a year to meet the target of 600-million tons during the 2018/19 financial year.

In terms of offtake, CIL has been achieving a higher growth rate of 7%, but thermal power plants continue to reel from shortage of fuel, an indication of low volume availability.

Central Electricity Authority data shows that, in first week of the current month, power plants across the country had an average of ten days’ consumption equivalent of coal stocks and that 20 of the 113 thermal power plants monitored had a ‘critical level of stock’ that is categorised as having less than seven days consumption equivalent of stock.