Asian economies are 'decoupling', but here's why it's no good news
Govt may tweak retail FDI norms to ease Walmart, Tesco's entry

Economy Jul 2, 2013

Ministerial panel wants freeze on requests for coal assurances

New Delhi: Amid widening demand-supply gap of coal and a huge pile of pending applications from power as well as other sectors seeking assurances for large quantities of the fuel, an Inter-Ministerial panel recommended keeping fresh requests in abeyance for two years.

"In view of the huge gap in supply and demand of coal, it was recommended that receipt of fresh applications for LoAs (Letter of Assurance) from Power sector be kept in abeyance for a period of two years," Standing Linkage Committee (Long-term) for Power has said after reviewing the status of existing such linkages.

Falling coal stock. Reuters

Falling coal stock. Reuters

The additional coal secretary-headed panel has received 1,590 applications for LoAs with a total estimated coal requirement of about 3,200 mtpa.

"This requirement is much beyond the availability of coal from Coal India Ltd sources. Apart from the above, applications are still being received in the ministry, which are accompanied with requisite fee," it said.

As regards the unprocessed applications, it was decided by the panel that the fees decided by them could be deposited to the government account but the processing of these applications should be kept in abeyance.

The committee decided that, "whenever it would be decided to accept fresh applications for LoAs, such unprocessed applications would get precedence over fresh applications".

The subsidiary companies of of Coal India have issued 176 LoAs covering the capacity of about 1,08,000 MW, and as per the coal ministry document, there is no scope for grant of new LoAs for 12 Plan (2012-17) power projects as CIL is indicating negative coal balance.

Earlier, participating in the review meeting CIL's Director Technical was of the view that further applications should not be received due to coal shortage.

However, chairman, Central Electricity Authority was of the view that stopping further applications would not be advisable in view of the requirement of power projects for 13th and 14th Plans.

But, joint secretary, Ministry of Power, said that there were sufficient number of applications already pending, to take care of requirement of 13th Plan and hence the receipt of fresh applications could be kept in abeyance.

Meanwhile, the demand-supply gap of the dry-fuel has been increasing.

Last week, coal secretary SK Srivastava has said that India will have to import 140 MT coal during the fiscal as compared to 135 MT last fiscal, of which 110 MT was imported for the power sector.


Related Stories.