GOVERNMENT OF INDIA
Ministry of Coal 

RAJYA SABHA
STARRED QUESTION NO. 203
ANSWERED ON DECEMBER 08, 2014

 QUESTION
Coal Linkages to Private Companies for Power Projects

*203. SHRI RAJEEV CHANDRASEKHAR: 

Will the Minister of COAL be pleased to state; 

(a)   whether Government is planning to provide coal linkages to private companiesfor new and upcoming power projects; 

(b)   if so, the details thereof; 

(c)    the price at which Government is considering to sell coal to these companies,company-wise and for how long they would get coal at this price; 

(d)   whether Government is aware that the market price of coal is more than doublethe price that was prevalent in the open market in September, 2014; and 

(e)   the reasons for this discounted price provided to private companies? 

ANSWER
MINISTER OF STATE (INDEPENDENT CHARGE)  IN THE
MINISTRY OF COAL, POWER AND NEW &RENEWABLE ENERGY
(SHRI PIYUSH GOYAL) 

(a)to(e): A statement is laid on the Table of the House.  

Statement referred to in reply to parts (a) to (e) of Rajya Sabha Starred Q.No.203for answer on 08.12.2014 asked by Shri Rajeev Chandrasekhar. 

(a) & (b): As per New Coal Distribution Policy (NCDP), 2007, Standing Linkage Committee (Long-Term) is authorized to recommend the Letters of Assurance (LOAs) for supply of coal. Based on the SLC (LT)'s recommendation, so far 177 LOAs have been issued tovarious power plants including Central/State Government Sector as well as IPPs(Independent Power Producers i.e., private companies) covering capacity of 108000MW. Out of this 1,08,000 MW capacity, the competent authority in 2013 had approvedsigning of Fuel Supply Agreements (FSAs) in respect of 78,000 MW capacity powerplants which have been commissioned or are likely to be commissioned by 31.03.2015.It was further decided that coal may also be supplied to power plants of 4660 MWcapacity and other similarly placed power plants that do not have any fuel linkagesubject to the availability of coal and on the condition that such supplies would notadversely impact the availability of coal for the identified plants of 78,000 MW capacityas per the approval accorded for LoA holders. A Presidential Directive to this effect wasissued to Coal India Limited (CIL) on 17.07.2013. The power projects of the remainingcapacity of 30,000 MW are yet to be authorized for signing of FSAs. Keeping in viewthe negative coal balance reported by subsidiary coal companies of CIL, new linkages/Letters of Assurance (LoA) have not been granted to any of the sectors since 2010. Atpresent, there is no proposal to provide fresh coal linkages to private companies for newand upcoming projects. 

(c) & (d): The coal linkages/LOAs issued to the Power Producers are converted into LongTerm Fuel Supply Agreements after achievement of prescribed milestones. Theconsumers under the FSA are supplied coal at the price notified by CIL from time totime. This applies to the regulated sectors (like Power Utilities including IPPs,Fertilizers, and Defence). For non-regulated sectors (like sponge iron, cement, steel,Captive Power Plants and other industries), CIL charges a price which is about 35%higher than the notified price. This is because the prices of end products of coal-consumingindustries in the non-regulated sector are market driven. 

As per the National Coal Distribution Policy, CIL can offer a small proportion of its coalproduction quantity for sale through 'e-auction' at a price which is higher than thenotified price, but which cannot be termed as market price. 

(e): Coal is being supplied to Power Sector as an essential input for power generation. Itis being supplied to power plants having coal linkage and having long term PowerPurchase Agreement (PPA) with power distribution companies and designatedagencies as per Fuel Supply Agreement at Coal India Limited (CIL) notified price. Thequestion of discounted price provided to private companies does not arise.