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Coastal power projects to source its own coal

Coastal power projects under construction may have to mandatorily import 30% of their coal requirements. Non-coastal projects, meanwhile, may be required to source 10% of their requirements from either overseas or sources other than Coal India.

A standing linkage committee held recently suggested that any power project coming up within 150 km of a port may be termed as a ‘coastal power plant’ for the purpose of earmarking import content.

For quite some the power sector has been at loggerheads with Coal India (CIL) over the fixing of the trigger point for the fuel supply agreement (FSA). While the sector has been asking for a 90% trigger point, CIL has been asking for 60%. The coal ministry wants a trigger point of 75%.

FSAs involve a commitment for supplying a certain volume of coal as agreed upon by Coal India (CIL) and the consumer. A 75% trigger point would mean that CIL would have to pay penalties if it fails to supply that percentage of the agreed volume. On the flip side, if the consumer would be liable to pay a fine if it does not lift at least 75% of the agreed volume.

This year, the power sector is expected to import about 20 MT of coal for existing power plants.

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