South Eastern Coalfields Ltd (SECL) is facing problem regarding renewal of FSA contract (fuel supply agreement) from several power companies.
It has been reliably learnt that the power gencos are not showing willingness to renew their FSA and have sent notice to SECL in order to terminate the contract prematurely.
The miner has been a prominent source of coal supplies for majority of the industries across Central India, due to better rail connectivity. Besides, its several sidings are having proximity to road network for hassle-free coal transportation.
However, citing inferior quality and continual delay in coal supplies via FSA route, major players like JSPL, HINDALCO, Prakash Industries, Satya Power and Bajrang Power are planning to part ways with the coal company.
Refuting the claims, an official from SECL has stated that contracts of many companies are nearing their tenure which is a normal process, and is up to the SECL board whether they would renew it or not, while informing there were no such issues pertaining to quality and inability to dispatch.
He added only the small companies who are currently facing shortage of labour and financial issues are terminating their FSAs.
Meanwhile, reeling under the pressure of COVID-19, SECL has significantly lowered its coal production due to lower demand and elevated stock-piles but managed higher dispatch in the first quarter of FY ’21.
The miner has dispatched 29.96 mn t coal against the output of 27.36 mn t during Apr-Jun ’20 period. However, the dispatches have fallen 21% y-o-y from 37.75 mn t recorded in the corresponding period of previous fiscal.
Going forward, CIL and its subsidiaries would intent to address customers complain regarding grade slippage at a time when the government is expediting the entry of commercial miners in coal sector. Notably, raising similar concerns HINDALCO, Vedanta and JSPL have already terminated their FSAs with Jharkhand based subsidiary-CCL.
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