Indian coal supplies get expensive

Indian coal supplies get expensive
Published: 03 January 2006

Domestic coal may soon become dearer for the cement and steel and sectors. Apparently  because these sectors have been asked to source at least 20 per cent of their needs from the open market.

"The energy coordination committee headed by Prime Minister Manmohan Singh had recommended that barring the power sector, existing coal linkage for other constituents of the core sector _ steel, cement and sponge iron be reduced to 80 per cent from the current 100 per cent, implying that producers in these sectors would now have to buy the deficit 20 per cent coal from the open market," a coal ministry official said. As a result, these industries would have to pay more for coal. So far, they were paying prices administered by the government.

Under the new arrangement, coal linkage of these sectors will now be ensured by state-run coal companies through long-term fuel supply agreements whereby they will be provided the required amount of coal on merit.

The committee had decided to ease the pressure on Coal India Ltd and its subsidiaries so that it could focus on the needs of the power sector, which had planned an additional capacity of 60,000 Mw by 2020, officials said. The power sector has been blaming Coal India  for being unable to meet its requirements and has also warned that it will have to shut down a few thermal power plants owing to paucity of coal.

The Planning Commission had forecast the demand-supply gap to be 55Mt by 2006-07 and 95Mt by 2011-12, sources said (Business Standard)