Coal India adopts mine-specific supply policy for large consumers

Thursday, May 26,

Coal India adopts a policy to offer mine-specific supplies to its large consumers at a minimum of 10% risk premium over the notified price. The new policy has come into effect from this month.*

According to the CIL Chairman, Mr N.C. Jha, as per the latest decision, the consumers will have to share the benefits (on accounts of primarily freight cost) of sourcing coal from close proximity on 50-50 basis with CIL, subject to a “minimum benefit of 10 per cent over the notified price” for Coal India.

The supplies at present are made through firm agreements (FSA) with binding penal clauses and supply to each consumer is made from multiple sources, thereby reducing the risk of paying up penalties in the case of operational setbacks in a particular mine.

According to the new policy approved by the CIL board of directors earlier this month; consumers may henceforth approach supplies from a source of their choice but, at an added cost. But the company cannot lift more than 70 per cent of the production of a particular mine.