State-run Coal India Ltd (CIL), the world's largest coal mining company, has announced a significant policy change that will allow power plants to receive more coal than their Annual Contracted Quantities (ACQs). This move is set to benefit power plants and Independent Power Producers (IPP), which are seeking to lift higher quantities of coal beyond their stipulated ACQ, particularly during periods of increased demand.

Policy Change:

Previously, power-generating companies that had signed Fuel Supply Agreements (FSA) with CIL were allowed to receive up to 120% of their ACQ. However, CIL has now done away with this provision, enabling power plants to obtain more coal based on their needs without the earlier restriction.

Statement from CIL:

In a statement released on Tuesday, CIL highlighted that this policy change would boost coal supplies at a time when coal demand is showing signs of slackening. The company also emphasized that its mine pitheads currently hold a coal stock of 72 million tonnes (mt), which is a 47% increase from the 49 mt stock recorded on August 12, 2023.

Supply Statistics:

In the fiscal year 2023-24, CIL's supplies to coal-fired power plants reached an unprecedented 619.7 mt, meeting 101.6% of the projected demand. This represents a significant increase of 31.9 mt compared to the 586.6 mt off-take to the power sector in 2022-23, marking a 5.4% growth in volume terms.

Linkages with Power Plants:

Of the 153 domestic coal-based power plants in India, CIL has long-term linkages with 127 plants for a total of 592 mt of coal. Additionally, CIL has linkages with 50 out of the 54 domestic coal-based IPPs for 155.7 mtpa.

Impact on Power Generation:

In 2023-24, domestic coal-based power plants in India generated 1,177 billion units (BU) of electricity. Notably, around 78% of this electricity was fueled by coal supplied from CIL sources, underscoring the company's critical role in meeting the nation's energy needs.

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Conclusion:

This policy shift by Coal India Ltd reflects the company's proactive approach to managing coal supplies in a dynamic market environment. By allowing power plants to lift coal beyond their ACQ limits, CIL is positioning itself to better meet the fluctuating demands of the power sector while ensuring the efficient utilization of its growing coal stockpiles. This move is likely to have a significant impact on the power generation industry, providing greater flexibility and reliability in coal supply to meet India's energy requirements.

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