[Ferro-Alloys.com] Coal India, the world's largest coal miner, will reduce the proportion of imported coal in its committed fuel supply to power producers from 15 per cent this fiscal to 5 per cent in 2016-17, according to a new pact it will sign with consumers.

 

The new fuel supply agreement, or FSA, that Coal India notified on Wednesday has also done away with controversial force majeure clauses, which excused the state-owned miner from meeting its obligations in case of unforeseen events beyond its control.

 

According to the new pact, Coal India will meet 80 per cent of the coal requirements of power companies, a part of which will be imported.

 

For imported coal, power companies will have to make advance payment and once they place an order they cannot reject the coal under any circumstance. They will also pay a 2 per cent service charge to Coal India. Also, the volume of imported coal will be considered 1.5 times the volume of domestic coal. This is because imported coal has less waste, or ash content, than coal mined in India.

 

The new FSA will be applicable to power generation units commissioned after December 2009 and units that will come up till March 2015. It will be valid for 20 years.