Government may ask Coal India Ltd to import coal for power companies

[Keep watch on Tata Power Ltd (Rs.93.45), Adani Power Ltd (CMP: Rs.42.45), Reliance Power Ltd (Rs.89.35), KSK Energy Ventures Ltd (Rs.57.25),etc. By accepting the shortage of coal as a major problem, Power Minister said he has already written to Prime Minister. Power Minister said other policy initiatives and reforms are also being undertaken to make this sector attractive. The Power Minister said that the participation of private sector has increased by 6% in 2006 to 29% 2011, and private sector share in generating and distributing will increase more than 50 % by the end of the next five year plan. And power ministry is targeting to add 100,000 megawatt of additional electricity capacity for next five years. Out of projects worth 80,000 MW capacity under construction, some 50,000 MW was being implemented by private developers such as Reliance Power, Adani Group and Tata Power]

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The government may ask Coal India to import the dry fuel to meet the growing domestic demand and adopt price pooling of international and indigenous coal for supplying to power companies.
In a letter to Coal India, the Coal Ministry has said, "In the interest of growth of the economy and to increase power generation, efforts are needed to make adequate coal available."
The Power Ministry has also suggested to the Coal Ministry that there is necessity of coal imports and pooling of the price of imported and domestic coal.
"In this regard, CEA ( Central Electricity Authority) needs to prepare a detailed operational plan in consultation with Coal India, Railways and Port Authorities," the Power Ministry said.
The pool pricing mechanism of coal may be decided by Coal India.
Power generation companies are battling with fuel shortage due to less and erratic supply from the country's largest coal producer Coal India.
Earlier, the Prime Minister Office had directed Coal India to enter into fuel supply agreements with power producers for committed supply of the dry fuel. The PMO is believed to have asked CIL to assure power firms of providing 65 per cent of the total coal contracted.
The Power Ministry has also suggested that "considering the constraints in ramping up production and arranging import in the first two years of the 12th plan, the penalties for supplies between 65 per cent and 80 per cent for 2012-13 and 75-80 per cent for 2013-14 may be suitably relaxed."
The Coal Ministry has asked CIL to consider these suggestions and take appropriate decisions for revision of clauses of the Fuel Supply Agreements to be signed with power producers. The Board of Coal India is likely to meet on July 31 to discuss the matter.
The company has set a production target of 464 million tonnes for 2012-13. Coal's demand-supply gap likely to reach 185 million tonnes (MT) by 2017 against 137 MT at present.

Courtesy: Economic Times