The Ministry of Coal wants to adopt flexible mode of transportation using both Roadways and Railways for easy evacuation of coal before the commencement of the third tranche of Linkage auctions.
About 15 MnT coal had been offered in the second tranche of linkage auction, however CIL could not conclude Fuel Supply Agreements (FSA), since there were supply constraints from Mahanadi Coalfields Ltd (MCL), South Eastern Coalfields Ltd (SECL) and Central Coalfields Ltd (CCL).
According to Railways officials, there had been backlog of at least 4 MnT coal with 1000 rakes pending. The officials have cited the slow production from CIL subsidiaries in contrast of the demand was the reason behind the backlog, and not the low supplies of coal rakes.
Moreover, CIL’s E-Auction and Linkage auctions have not been in line with its production and Offtake schedule. Since Auction takes place before physical production, there remains a gap between demand and supply.
SECL had earlier notified that it had been facing logistics constraints in transporting coal from pits to its railway sidings at Korba, Raigarh and Korea-Rewa fields. This forced SECL to stop supplying more coal than the trigger level to power consumers during July.
According to the Fuel supply agreements, CIL is obligated to supply a certain percentage of coal to its consumers failing which it has to pay penalty. This level is 75% for new power plants and 90% for old power plant. Non-power consumers also receive a certain of their annual coal requirement.
The percentage in technical terms is referred to as trigger-level because failing to supply this quantity triggers the penalty clause in fuel supply agreement signed with the consumer.
SECL had made provision for consumers demanding more coal than the trigger level that they can lift additional coal quantities through Road transports either from Korea-Rewa or Raigarh coal fields.
The decision was taken due to limited loading capacity at its railway sidings in comparison to demand.
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