State miner Coal India Ltd (CIL) believes 50 per cent of the demandfor power-grade fuel by electricity producers may have to be met with imports.
"CIL has made it clear that it will not be able to meet everybody'srequirement. If this has to be done, 50 per cent of coal will have to besourced from imports," CIL chairman S. Narsing Rao told IANS ahead of acompany board meeting Monday to approve the model fuel supply agreements (FSA)that include penalty provisions of 1.5-40 percent.
CIL has been in focus for its production and offtake, especially in the wake ofthe worst blackout the country faced earlier this month. Forced virtually bythe Prime Minister's Office, the company board at a meeting here last weekagreed to a proposal of supplying imported coal using a "pooledprice" mechanism that was mooted first in 2010.
It also agreed to include only 25 percent of the cost of imported coal forprice pooling.
Rao said the company may have to import around 20 million tonnes of coal thisfiscal and power producers will have to bear the costs.
"Landed price of one tonne of coal with calorific value of 6,000 kilocalories will cost around Rs.6,000 per tonne and total outgo as a result ofthis is expected to be Rs.3,000 crore. Power producers using this coal willhave to pay Rs.4,500 per tonne for this coal.
"Rest of the money, Rs.1,500 per tonne, will be shared from the pool whichwill put the burden on all power producers irrespective of their consumption.This is expected to increase the cost of coal by about Rs.87 per tonne,"said Rao.
But the proposal needs approval of the Central Electricity Authority and buyersas price pooling would raise the costs of coal for existing plants and thepower tariffs by about seven paise per unit.
"If coal has to be imported, consumers have to take coal at that price. Weare selling coal at a discount of 26 to 70 percent of the imported price inenergy terms. It is not feasible to have 100 percent import parity in the coalprice. The country is not in a position to absorb that high cost."
Rao said Coal India has agreed to revision of the penalty clause in the fuelsupply agreement (FSA) to meet pending demand.
"We have agreed to this (revised penalty clause) in response to thepending demand of power companies."
The miner has so far signed FSAs with 29 power companies. These include RosaPower, Bajaj Energy, Jhajjhar Power, Rajasthan Rajya Vidyut Nigam, CESC, Lancoand Mundra Power.
Public sector producers NTPC and Damodar Valley Corp are among the 48 powerproducers that are yet to sign the pact.
Asked about the company's unsatisfactory performance, Rao said: "There ispotential in a lot of mines to produce more, but by doing this, we would crossthe EC (enviromental clearance) limit, which is not allowed. In other cases, wecannot produce because of forest clearance and land acquisitionconstraints."
Asked about comments that CIL cannot avoid responsibility for the shortfalls inthermal power generation, Rao said: "CIL is not the repository of theentire country's coal resources. CIL is trying to produce the maximum it can.It should be the power sector's lookout if they are not able to meet generationtargets."
"Whenever Letters of Assurance (LOAs) have been granted, we have alwaysinformed the government that CIL does not have enough coal."