CIL extends Fuel Supply Agreement tenure to 10 years for NRS

by Psu Connect
Date: 09-01-24

For sponge iron sub-sector customers tranche-VII of the linkage auction commenced in the last week of December 2023, to meet their coal demand, even though the conversion ratio of successful bids into FSAs was low, by this sector, in tranche-VI.

CIL extends Fuel Supply Agreement tenure to 10 years for NRS

New Delhi: Coal India Limited (CIL) has begun tranche-VII of the linkage auction to the non-regulated sector (NRS) within days of completion of tranche-VI. CIL has proactively increased the tenure of fuel supply agreement (FSA) to 10 years, beginning with the seventh tranche, to ensure long-term assurance of coal supply through linkage auction to NRS. For sponge iron sub-sector customers tranche-VII of the linkage auction commenced in the last week of December 2023, to meet their coal demand, even though the conversion ratio of successful bids into FSAs was low, by this sector, in tranche-VI.

“CIL is committed to supplying coal to the extent of the normative requirement of all industrial sectors including sponge iron. In this endeavour regular linkage auctions, as per the government’s approved policy are being conducted for long-term coal linkages”, said a senior official of CIL.

The response in tranche-VI of linkage auction for sponge iron sub-sector has been rousing with 99% of the total offered quantity of 11.05 million tonnes (mts) being successfully booked. The booked quantity was 10.98 mts. South Eastern Coalfields Limited (SECL) and Mahanadi Coalfields Limited (MCL) between them accounted for 86% of the total offered quantity at 9.5 mts. While SECL put 7.67 mts under the linkage auction hammer, MCL chipped in with 1.83 mts. Almost the entire quantity was booked.

Out of the total successful booking of 7.64 MTs in SECL, by the sponge iron units, only 3.88 MT or 51% was converted into FSAs. In case of MCL, 1.44 MTs got converted into FSAs out of total booked quantity of 1.83 MTs. CIL extended the timeline, to facilitate the signing of FSAs, by 75 days over and above the norm of 90 days.

Apart from the long-term assurance of regular supply of coal provided through linkage auction, CIL is also conducting single window e-auction where any consumer can participate and get coal for meeting short-term requirements.

At the end of December of the current financial year, 64 MTs of coal was offered across CIL, of which 56.7 MT was successfully booked including 17.4 MT from SECL and 15.3 MT through MCL. With the increased availability of coal in the last quarter of the fiscal, offer of coal is likely to increase further under the e-auction window. CIL is aiming to put 20% of the envisaged production of this fiscal fourth quarter under e-auction block.

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