Coal India Ltd. (CIL) has decided to charge a premium of 40% over the notified price across the entire range of coal grades supplied under its flexi utilisation policy.
This revision would be applicable specifically for the thermal power plants lifting coal against this policy that do not have fuel supply agreement (FSA) with individual CIL subsidiaries effective from 22 November, 2022.
It is to be noted that the miner has affixed separate prices for the individual coal grades which are known as the ‘notified price’. Interestingly, this set of prices has not been revised for the past four years.
Under the flexi utilisation policy, the government permits state governments to transfer domestic coal linkage supplies of one power station to another for reducing the cost of power generation.
This facility is valid for plants set up within the states which have been established through a bidding process based on the net heat rate, provided that the power generated from such plants is supplied to the state itself.
The objective of this exercise was to pass on entire savings to the power distribution companies and ultimately to the consumers. At the same time, reduction in carbon emissions was sought as the coal was used in the more efficient power plants with lower station heat rate.
Coal consumption at power plants rises 12%
Robust power demand has spurred higher coal burning at power plants this year, as the government has taken stringent measures to ensure that thermal plants were kept operational.
As per data furnished by the Power Ministry, coal consumption at thermal plants increased by 12% y-o-y to 447.6 millon tonnes (mnt) in April-October 2022.
Indigenous coal supply played a vital role in addressing the situation especially when inventories at power plants had fallen to alarming levels. During April-October this year, coal supplied via domestic sources to these plants increased by 13% y-o-y to 410.7 mnt.
However, imports were essential in order to compensate for the shortfall in domestic supplies. Importantly, the government had directed these plants to import 10% of their coal requirement for blending purposes.
As a result, imports by these plants surged 114% y-o-y to 38.84 mnt during April-October this year, which has already surpassed the total of 27 mnt recorded in FY22.
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