Govt to increase availability of coal for NRS sector under FSA for long-term: Sources

The government is planning to increase the availability of coal, tied up under long-term FSA, for the Non-Regulated Sector (NRS), sources told PSU Watch

New Delhi: With a mandate to reduce the import of coal that can be substituted via domestic production to zero by FY2025-26, the government is planning to increase the availability of coal, tied up under long-term Fuel Supply Agreements (FSA), for the Non-Regulated Sector (NRS), sources in the know of the matter told PSU Watch. Substituting the import of coal, wherever possible, is a major focus area in the next set of reforms being planned by the Modi government in its third tenure, sources said.

The availability of coal under the e-auction window is erratic, depending on the availability of coal and the demand from the power sector. In the past few years, when the price of coal has gone up internationally, the availability of coal to the NRS consumers has been limited. Although with increase in domestic coal production, the situation is changing. In Q1 of FY2024-25, coal supplies by India’s largest coal miner, Coal India Limited (CIL), to non-power sector increased 16 percent year-on-year to 38.4 Million Tonnes (MT).

Govt to increase coal availability for NRS through long-term linkage

To assure consumers of the availability of coal, the government is planning to increase the quantity of coal available under FSA for long-term for non-regulated sectors, like cement, steel, sponge iron, paper etc. “Currently, around 70 MT of coal is being made available to NRS via FSA. We want to increase this to about 100-120 MT. So, that there are more assured buyers. And they are able to purchase coal from Indian companies,” said the source.

However, whether the government’s plan takes off will depend on how NRS consumers of coal receive it. Another industry source who spoke to PSU Watch pointed out that the NRS sector increases the procurement of domestic coal only when the international prices go up. “At other times, they prefer to import coal because of high ash content in domestic coal. So, it remains to be seen if they are willing to increase the procurement of domestic coal,” he said.