Coal India set to ease FSA norms for coal import, levy fee

New Delhi: The coal ministry will issue a directive to Coal India (CIL) asking it to relax its norms under the provisions of fuel supply agreements (FSAs) to facilitate coal imports for power projects.

The state-run miner will supply imported coal on a cost-plus basis along with an administrative charge to be decided by its board of directors.

The fuel supply agreements approved by the Union Cabinet in 2013 provide that CIL can import coal to meet its contractual commitments. The company is at present able to meet 100% of the requirements and cannot import coal under the current rules.

The relaxation will allow CIL to import coal under present circumstances when the government is keen to build stocks before the monsoons when domestic mining slows. "With present stocks and production outlook, CIL is positioned to meet 100% of its FSA," a government official said. "In view of several states expressing difficulty in importing, CIL has offered to go beyond its FSA import provisions, which will be enabled by the coal ministry."


Coal companies have 60 million tonnes (mt) of coal at mines, while there is another 21 mt at power plants. Coal India has, in the past, imported through state agencies such as MMTC.

The power ministry has asked power plants to blend domestic coal with 10% imported coal to meet a fuel crunch following a sudden rise in power demand due to an intense and early summer. A sharp rise in international coal prices has dampened imports, raising demand for domestic coal.
Import Needs

CIL also held meetings on Monday with power project developers seeking clarity on the requirement of imported coal.

The power ministry had three days ago shot off letters to power generating companies informing them that Coal India would import coal for blending on a government-to-government basis and supply to thermal plants along with the domestic coal plants on composite billing.

The generation companies have been asked to provide their imported coal requirement for the remaining FY23 by Tuesday.

On April 28, the power ministry had asked all power plants to import 10% of the coal they need to build stocks amid projections of record power demand.

Last week, the power ministry invoked an emergency clause to allow compensation to 32 Gw domestic coal-based power projects for higher costs due to the blending of imported coal with domestic coal till March next year.


(You can now subscribe to our Economic Times WhatsApp channel)