Coal India threatens to cut supplies to four UltraTech Cement power plants

Coal India threatens to cut supplies to four UltraTech Cement power plants
16 July 2012

Coal India has threatened to cut supplies to four of UltraTech Cement’s captive power plants located in the Indian states of Rajasthan, Chhattisgarh and Madhya Pradesh.

DNA India reported that last week, Coal India wrote to 16 captive power plants, including the UltraTech facilities, threatening to break long-term linkages. These units were found to be incomplete when a meeting of the Standing Linkage Committee reviewed their implementation status, officials of Coal India Ltd (CIL) said.

When Coal India signs long-term linkages with a proposed plant, a set of milestones is agreed upon, which specifically mentions the deadline for different stages of completion of a plant up to the date of commissioning, and periodic status reports are to be submitted which are then reviewed.

“If the captive plants are found to be commissioned with all the milestones achieved, the Fuel Supply Agreement (FSA) may be concluded with them within three months from the date of issuance this notice. Otherwise, linkages may be cancelled,” the letter said.

UltraTech’s captive power plants include a 46MW plant at Hirmi Cement Works in Raipur, Madhya Pradesh, a 35MW CPP Unit 2 at Aditya Cement plant in Chittorgarh, Rajasthan, a 23MW unit at Rawan Cement Works in Raipur, and another 23MW unit at Vikram Cement plant in Khor, Madhya Pradesh.

“There are two cases viz UltraTech Cement (46MW) and Grasim Cement (23MW) where the Ministry of Coal has approved revision in configuration of the captive plants, and subsequently, CIL was requested to re-examine the matter of signing FSAs, based on clarifications furnished by the two units,” the report of the Standing Linkage Committee meeting noted.

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