Coal India Ltd (CIL) has signed fresh fuel supply agreements (FSAs) for coal volume of around 47.19 million tonnes (mnt) with power companies during calendar year 2022 (CY22), as per data provided by the company.
FSAs indicate contracts for annual coal supplies governed by legally enforceable agreements between the seller (coal companies) and the consumer under specific terms and conditions. These help the plants to secure long-term supplies at a comparatively cheaper price than the regular e-auction mode of sales.
In CY22, FSA contracts executed under the existing coal distribution policy accounted for 9.78 mnt of coal, but these provide a long-term supply for a minimum 20 years comparable to the other provisions.
Snapshot of FSA contracts executed in CY22
Source: CIL | Quantity in mnt | NCDP-New Coal Distribution Policy
In particular, bridge linkages hold the majority of the FSA contracts. These refer to a temporary supply arrangement for power plants till the time their allocated captive coal mines become operational. The beneficiaries include power plant units of NTPC, DVC and Rajasthan electricity board.
CIL subsidiaries had also assigned several FSAs as per categories defined under SHAKTI (Scheme for Harnessing Koyala Allocation Transparently in India) policy. Some of these were carried out on nomination basis (under A(i) and B(i) scheme) while remaining were executed against allocation based on competitive auctions.
Subsidiary-wise contract status
The coal-based power plants account for 80% of CIL’s supply annually as these are the mainstay of the country’s power generation.
The FSA contracts hold a vital importance towards ensuring fuel security for the plants at a time power demand is expected to surge due to rapid urbanisation and industrialisation.
Based on the study conducted by Central Electricity Authority (CEA), it was found that coal consumption at power plants would increase to 1,058 mnt by financial year 2032 (FY32) from present level of 700 mnt.
During CY22, Central Coalfields Limited (CCL) has topped in terms of signing FSA contracts, which was also more than that of CIL’s largest coal producing subsidiary – Mahanadi Coalfields Limited (MCL). Meanwhile, no FSA was concluded by Eastern Coalfields Limited (ECL).
As on 25 January, 2023, CIL subsidiaries have total active FSAs (comprising of both new and existing contracts) with power plants for an aggregate volume of 631 mnt, which have been intiated since 2009.
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