Indian government has decided to bring to zero import of coal for blending purpose by domestic coal-based power plants in the current fiscal, and has asked state-owned CIL to enter into a pact with power generation companies for domestic supply of coal.
"Several initiatives are being taken for supply of domestic coal as import substitution and the same has been deliberated in the meetings held on April 4 in Ministry of Coal, and in the Ministry of Power chaired by Additional Secretary Power." Coal India Ltd (CIL) said in a letter to its subsidiaries.
"It has been decided to bring the level of import of coal for the purpose of blending by the domestic coal-based power plants to zero level in this fiscal," it said.
The country has abundance of domestic coal and is grappling with slump in demand for the dry fuel.
"It was also decided in the said meeting to tie up the long-term requirement of import substitution through MoU. Accordingly, the supply of coal through import substitution, a model MoU has been prepared, which has been legally vetted," CIL informed its arms.
"The MoU will be an integral part of the fuel supply agreement. Performance incentive as well as other provisions including compensation for short supply/lifting shall be dealt as per FSA provisions," CIL said.
Further, the Central Electricity Authority (CEA) will issue directions to all such power plants/power generation companies to sign memorandum of understanding (MoU) with coal companies and ensure dry fuel is supplied to such power sector units over and above their fuel supply agreement (FSA) entitlements.
Under FSA, fuel supplies are governed by legally enforceable agreements between the seller (coal companies) and the consumer under specific terms and conditions.
The Ministry of Power on April 28 had issued an advisory to generation companies for reducing import of coal and replacing it with domestic coal.
The country imported 247.1 million tonnes of coal in FY2019-20, about 5% higher than 235.35 million tonnes imported during FY2018-19.
Coal Minister Pralhad Joshi had earlier written to state chief ministers, asking them not to import the dry fuel and take domestic supply from CIL, which has the fossil fuel in abundance.
To boost coal demand, the government earlier announced a slew of measures like increased supply for linkage consumers.
It has also announced several relief measures for CIL consumers, including the power sector.
The PSU closed the financial year 2019-20 with coal production of 602.14 million tonnes against the target of 660 million tonnes.
It is targeting 710 million tonnes of coal output in the ongoing financial year.
(Writing by Becky Du Editing by Tammy Yang)
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