Coal India Extends Fuel Supply Agreement Tenure For Non-Regulated Sector

State-owned Coal India Ltd on Tuesday said it has extended the tenure of fuel supply pact to ten years from the earlier five years for the non-regulated sector.

The move aims at ensuring long-term assurance of coal supply through linkage auction to the non-regulated sector.

CIL has begun the seventh tranche of the linkage auction to the non-regulated sector within days of completion of the sixth round.

"CIL has proactively increased the tenure of fuel supply agreement to 10 years, beginning with the seventh tranche," the company said in a statement.

For sponge iron sub-sector customers, the seventh round of linkage auction started in the last week of December to meet their coal demand, even though the conversion ratio of successful bids into FSAs was low by this sector in the sixth round.

"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," a senior official of the PSU said.

The response in the sixth tranche of linkage auction for sponge iron sub-sector has been rousing with 99% of the total offered quantity of 11.05 million tonne being successfully booked.

Coal India arms South Eastern Coalfields Ltd (SECL) and Mahanadi Coalfields Ltd (MCL) accounted for 86% of the total offered quantity at 9.5 MT. While SECL put 7.67 MT for the linkage auction, MCL chipped in with 1.83 MT.

Almost the entire quantity was booked, the company said in a statement.

Out of the total successful booking of 7.64 MT in SECL by the sponge iron units, only 3.88 MT or 51% was converted into FSAs. In the case of MCL, 1.44 MT got converted into FSAs out of the total booked quantity of 1.83 MT.

CIL extended the timeline in order to facilitate the signing of FSAs by 75 days over and above the norm of 90 days.

Apart from 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.

As of December quarter FY24, 64 MT 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 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's fourth quarter under e-auction.

Coal India accounts for over 80% of domestic coal output.