Companies such as NTPC, GMR
Energy, Shree Cement Ltd and the Railways are among hundreds of companies
seeking coal supplies from the Government for their power, steel and cement
projects.
In the past year alone, the Coal
Ministry has seen a 20% rise in applications to over 1,500 from those seeking
long-term coal supplies for their projects. The demand is led by captive power
producers, independent power producers, State electricity boards, sponge iron
and cement makers.
Securing a linkage would enable
the end-users to procure coal at a lower price than the prevailing market
rates.
Supply for such linkages is done
through Coal India Ltd (CIL) and comes at a notified price which is at a
discount to the global prices.
The differential between the
CIL-notified rates and the global prices range from as low as 15-20 per cent
for the higher grades to as high as 50 per cent for the lower grades of coal.
Also, the notified prices in the
past six months were lower by as much as 68 per cent when compared with the
coal sold in the domestic market through e-auctions.
This demand surge comes at a time
when CIL's output has remained stagnant in the past couple of years.
Environmental considerations and land acquisition issues are hurting CIL's
expansion plans.
As a result, the Ministry has not
been able to allocate linkages to these players though some linkages were
provided on selective basis over a year ago, sources said.
Coal imports to bridge the
demand-gap supply are expected to double to 142 million tonnes (mt) in the
current fiscal against 70 mt last year.
The Ministry had stopped issuing
coal linkages from early 2009. Instead, Letters of Assurance (LoAs) are issued
based on the recommendation of Standing Linkage Committee, after scrutinising
the applications.
Till March 2012, the coal
requirement for the power sector is pegged at 396 mt. Of the 347-mt now offered
by CIL, 306 mt already stands committed for supply to generating stations
commissioned till March 2009.
“Over 100 applications have been
submitted during January-July this year, mostly from captive power plants,
followed by SEBs and independent power producers,†said an official from the
Independent Power Producers Association
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