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LONG-TERM
COAL LINKAGES During the year 2008-09, three meetings of Standing Linkage
Committee (Long-term) were held. The Committee recommended issue of Letter of
Assurance (LoA) by CIL/SCCL to various consumers,
subject to furnishing of appropriate commitment guarantees.-
COAL PRODUCTION,
DISTRIBUTION AND MARKETING COAL PRODUCTION Through sustained programme
of investment and greater thrust on application of modern technologies, it has
been possible to raise the production of coal from a level of about 70
million tonnes at the time of nationalization of
coal mines in early 1970's to 492.95
million tonnes (All India – including Meghalaya) in 2008-09. Coal
Singareni Collieries Company Limited (SCCL) is the main
source for supply of coal to the southern region. The company produced 44.54 million tonnes of coal during 2008-09 as against 40.604 million tonnes during the corresponding period last year. Small quantities of coal are also produced
by TISCO, IISCO, DVC and others. COAL
DISTRIBUTION AND MARKETING The
Marketing Division of CIL coordinates marketing activities for all its subsidiaries. CIL has set up Regional Sales Offices and Sub-Sales
Offices at selected places in the country to cater to the needs of the
consuming sectors in various regions.
Linkage Committees Two
types of linkage committees function for deciding the long term and short
term availability of coal and distribution to the consumers belonging to
Cement, Power & Steel including Sponge Iron Units. (i) Standing Linkage
Committee (Long - term) (ii) Standing Linkage Committee (Short - term) Standing Linkage Committee (Long-term) Standing Linkage Committee (Long-term) for
Power, Cement and Sponge Iron considers requirement of coal of consumers at
the planning stage and links the requirement in the long-term perspective
from a rational source after examining factors like quantity and quality required,
time frame, location of the consuming plants, transport logistics,
development plan for the coal mine etc. The
Long-term linkage Committee is presently being Chaired by Special Secretary, Ministry of
Coal and has representatives from Ministry of Power, Ministry of Steel,
Ministry of Commerce & Industry, Ministry of Railways, Department of
Shipping, Central Electricity Authority, Coal India Limited, CMPDIL and Singareni Collieries Company Limited (SCCL). In addition
to above there is another committee
known as Standing Linkage Committee(Short-term), an inter Ministerial Committee consisting
of the representatives of Ministry of Power, Central Electricity Authority, Railways,
Department of Industrial Policy and Promotion and
coal companies. This Committee
allocates coal to
consumers of Power and Cement
Sector on quarterly basis taking into
account coal production and logistic
involved therein. The short-term
linkages to power and cement industries are granted once every quarter. SLC
also takes care of mid term deviations. Coal India Limited, Kolkata, decides allocation to Sponge Iron Units. Linkages of
coal to thermal power stations are allocated by Standing Linkage Committee
(ST) on quarterly basis keeping in view the recommendation made by the
Central Electricity Authority (CEA). The CEA recommendations are based
on the power
generation programme,
ground stock with
individual power houses etc.
Factors for deciding the linkages are power generation programme, availability of coal and carrying capacity of Railways as
well as feasibility of movement by other modes. New Coal
distribution Policy has
introduced the concept of
“Letter of Assurance” (LOA) ,
which provides for assured supply of coal to developers, provided
they meet stipulated milestones.
Once the milestones as stipulated in the LoA are met by the developers, LoA
holders would be entitled to enter
into Fuel Supply Agreements (FSAs) with the
coal companies for long-term supply of coal. The quantity of coal to be
supplied along with other commercial terms and conditions are covered in the
FSA itself. STEEL PLANTS The
allocation of coking coal to steel plants was earlier made by the Coal
Controller. However, after deregulation of coking coal, the supplies of
coking coal are being made by the coal companies themselves on the basis of
linkages established by the SLC(LT) or on the basis
of their existing commitments. During the
year 2008-09, CIL and SCCL supplied the following quantities of coal to
various consumers: COAL
INDIA LTD. (Million Tonnes) (Provisional)
SINGARENI
COLLIERIES COMPANY LTD. (Million Tonnes) (Provisional)
POWER HOUSES Off-take of coal by thermal power stations
during the year 2008-09 (April-March) from CIL & SCCL was 325.66 million tonnes as against 309.874 million tonnes during the same period in 2007-08. CEMENT PLANTS The despatch to cement plants from CIL and SCCL during
2008-09 (April-March) was 15.053 million tonnes as
against 14.989 million tonnes during the same
period in 2007-08. MODE OF TRANSPORT Important modes of
transport of coal in CIL are Railways, Road, Merry-go-Round Systems
(MGR), Conveyor Belts and the
PROGRESS MADE UNDER NEW COAL DISTRUBUTION POLICY Prior
to introduction of New Coal Distribution Policy in
October,2007, the consumers
were broadly classified in two categories to Core and Non Core Sector. The basis for earlier classifying
consumers was solely based on there role in economic development. However, the erstwhile classification of the consumers under New Coal
Distribution Policy has been dispensed
with. This policy was formulated in view
of the direction of the Under
this Policy each
sector/consumers have been
treated on merit, keeping in view the regulatory provisions applicable
thereto. Earlier Standing Linkage Committee (Long
Term), inter alia, granted
long-term coal linkage to power utilities, IPP, CPP and Cement units
with firm commitment of the coal
quantity and the identified
sources of coal supplies. However, it
was observed that many of the power projects, which were granted long-term coal linkage, did not come
up as planned resulting in preemption
of coal linkage. Therefore, under New Coal distribution Policy it was decided
to introduce the concept of “Letter of Assurance” (LOA) , which provides for assured supply of
coal to developers, provided
they meet stipulated milestones.
Once the milestones as
stipulated in the LoA are met by the developers, LoA
holders would be entitled to enter
into Fuel Supply Agreements (FSAs) for long-term supply of coal. Progress
made by CIL/SCCL in implementing the provisions of NCDP 2007 is summarized
below: COAL
INDIA LIMITED (a)
Classification of
consumers into core and non-core sector has been dispensed with (b)
Linkage system has been
replaced with Fuel Supply Agreement (FSA) and accordingly out of 1223
existing valid linked consumers, 1168 consumers have already signed FSA
with the coal companies in categories other than Power Utilities. SECTOR WISE POSITION OF FSA UNDER
NCDP(up to 31-3-09)
(c)
The policy for issuance of
LoA in respect of all the new consumers who have
been recommended by SLC(LT) has been implemented.
505 new consumers in the power, steel and cement sectors who have been
recommended LoA by SLC(LT)
have been issued letters of Assurance (LoA).
Subject to completion of milestones specified in the LoA,
they would be eligible to execute FSA and thereafter draw coal, once the
plants are commissioned. (d)
For supply of coal to
small and medium consumers, 8 MT of coal has been earmarked by CIL for
allocation to agencies nominated by the State Governments / (e)
Steps have been taken in
order to enforce discipline and economy in use of coal as per NCDP
directions, including stipulation of detailed terms for sale of coal under
e-auction, applying strict cross-checks in use of coal under FSA and detailed
scrutiny of the milestones before executing FSA (f)
Scheme for Forward
e-auction was introduced in 2008, but the same have been held up temporarily
as only a few consumers have registered for participation in the scheme. The
Scheme is being reviewed and is due to be re-launched soon SINGARENI
COLLIERIES COMPANY LTD (SCCL) (a)Out of 200 existing valid linked
consumers, SCCL has executed FSAs with 181
consumers. The remaining consumers have been provided draft FSA and are yet
to come forward for signing FSA (b)SCCL has signed FSAs
with 5 cement consumers and 24 sponge iron units who were recommended LoA by SLC(LT) (c)All the existing FSAs
with major cement customers were renewed w.e.f. 1st
April 2008 at 75% of their normative quantity as stipulated in the Policy (d)Govt. of Andhra Pradesh has nominated SCCL
as nodal agency for supply of coal to small and tiny consumers whose annual
consumption is less than 4200 MT. (e) E-auction scheme was launched in December
2007. DISTRIBUTION OF COAL TO SMALL & MEDIUM CONSUMERS The New Coal Distribution Policy also specifically addresses
the issue of supply of coal to consumers in small and medium sector since the
classification of the consumers as
core and non core sector has been dispensed with under the New Coal Distribution Policy. Under this policy, the State Governments
are required to work out genuine requirement of such units in small and
medium sector like Smokeless fuel, brick kiln, coke oven units etc. in a transparent
and scientific way and distribute coal to them accordingly. The State Governments are to take
appropriate steps to evaluate the
genuine consumption and monitor use of coal.
The cap has also been enhanced
to 4200 tonnes per annum from 500 tonnes for the targeted consumers under this
category. In order to meet the
enhanced cap fixed for such consumers, the quantity earmarked for
distribution by State nominated agencies would be increased to 8 million tonnes annually to start with. This quantity would be allocated for distribution to those
units/consumers in small and medium sector across the country
whose requirement is less than 4200 tonnes per annum and are otherwise not having any access to purchase coal or conclude Fuel supply Agreement
(FSA) for coal supply with coal companies. The earmarked quantity would be distributed through agencies
notified by the State Governments.
These agencies could be State Govt. Agencies/Central Govt. Agencies
(National Co-operative consumers Federation (NCCF)/National Small Industries
Corporation (NSIC) etc) or industries associations, as the State
Govt. may
deem appropriate. The agency so
notified will continue to distribute coal until the State Govt. decide to denotify it. The FSA
would be based
on firm commitment and compensation
for default in performance on
either side. The State Government/Central Govt.
agencies would be free to devise
their own distribution mechanism. However, the said mechanism should inspire public confidence and should result in distribution of coal in a transparent manner. The price charged to such agencies would be
the notified price as applicable to other consumers entering into FSA. The agency would be entitled to charge
actual freight and upto 5% margin as service charge, over and above the
basic price charged by the coal company,
from their consumers. The
concerned State Governments and Central Govt.
Deptt.
having administrative
control over the agencies
would be responsible to ensure that coal
allotted for targeted consumer
is distributed in a fair and
transparent manner and appropriate
action taken to prevent its
misuse. CIL has
informed that so far 24 States / FSA
WITH STATE AGENCIES UNDER NCDP AS ON 31ST MARCH 2009
E-AUCTION OF COAL Coal
distribution through e-auction was introduced with a view to provide access
to coal for such consumers who are not able to source coal through the
available institutional mechanism.
This scheme was however, discontinued in view of observations and
directions of the Apex Court in case of M/s Ashoka
Stainless Coal India Ltd Vs Union of India and Others. Thereafter, an interim
arrangement captioned “E-booking” was introduced to ensure supply of coal to
such consumers. The new modified
scheme of e-auction has now been introduced from November, 2007 in terms of
New Coal Distribution Policy which came into force w.e.f.
18.10.2007. During the year 2008-09, 488.74 lakh tonnes of coal was n allocated by CIL under
E-auction against the offer of 919.57 lakh tonnes. COMPANY WISE E-AUCTION APR- MAR’09
IMPORT OF COAL As per the
present Import policy, coal can be freely imported (under Open General Licence) by the consumers themselves considering their
needs based on their
commercial prudence. Coking coal
is being imported by Steel Authority of India Limited (SAIL) and other
Steel manufacturing units mainly to
bridge the gap between the requirement and indigenous availability and to
improve the quality. Coast based power plants, cement plants, captive power
plants, sponge iron plants, industrial consumers and coal traders are
importing non-coking coal. Coke is imported mainly by Pig-Iron manufacturers
and Iron & Steel sector consumers using mini-blast furnace. Details of
import of coal and products during the last five years is as under: (in million tonnes)
COAL CONSUMERS COUNCILS For redressal of consumer's grievances
and monitoring of complaints received from the consumers, one Regional Coal
Consumers Council has been set up for each coal company. An Apex body
viz. National Coal Consumers Council
has also been set up at the Headquarters of Coal India Limited. In case the complainant does not receive a
reply within a month or the complainant is not satisfied with the reply of
Coal Company, he may prefer a complaint to the National Coal Consumers
Council. These Councils have been reconstituted during the year 2008-09 with
the introduction of
many new members . The
meetings of these councils are also being held regularly. INTERNATIONAL CO-OPERATION (i) A Working Group between (ii) The Coal Working Group between In February 2009, Govt. of Mozambique have granted concession for prospecting and exploration of
two coal blocks in Representatives of Ministry of Coal also
participated in the 2nd Session of the Indo-Mozambique Joint Commission
meeting held on 19th February 2009 in MULTILATERAL COOPERATION TREND OF DESPATCH TO POWER
UTILITIES (MILLION TONNES IN TERMS
OF COAL & COAL PRODUCTS
TREND OF DESPATCH TO POWER
UTILITIES (MILLION TONNES IN
TERMS OF COAL & COAL PRODUCTS)
SECTOR
WISE POSITION OF FSA UNDER NCDP
COMPANY
WISE E-AUCTION APR- MAR’09
FSA
WITH STATE AGENCIES UNDER NCDP TILL MAR’09
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