Coal India Limited's (CIL), would meet to draft
and finalize a fuel supply agreement (FSA) to power plants this week on cut of 5%
import duty on non-coking coal which was announced in the Union Budget.
“The board meeting would take stock of
current domestic availability of coal and new cost structures of imported coal
following removal of import duty and impact on CIL financials. The Indian
budget has also implemented a duty free regime for imported coal mining
equipment,” said CIL officials.
“CIL had been asked to sign FSAs with power
companies that had already signed long-term power purchasing agreements with
distribution companies and would get commissioned on or before the end of March
2015,” said the Finance Minister.
CIL would have to supply 504 mt during 2012/13 if all
pending FSAs with power companies were to be concluded.
“CIL board will discuss to increase supplies
of imported coal even without duty since factoring in transportation andinfrastructure
costs, imported coal would be between 30% and 60% costlier than domestic coal
and the coal producer was not convinced that the power industry would be willing
absorb the higher price,” officials said.
The moot point not addressed by the budget
or planners is that increasing production or imports might not solve the
problem. There was not enough transportation capacity either in Indian railways
or ports to handle higher supplies of coal, be it domestic or imported and it
has been left to CIL to address these issues,—an analyst said.
miningweekly.com
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