The Union Cabinet of the Government of India, has approved the methodology for flexibility in utilization of domestic coal for the purposes of reducing the cost of power generation. Coal is supplied to coal based power plants under a Fuel Supply Agreement (FSA). Due to differences in efficiencies of different thermal power plants, certain power plants are able to produce the same amount of power with comparatively lesser utilization of coal. However the contract quantity of coal is stipulated on an annual basis under the FSA.
In order to introduce flexibility in such allocation of coal to thermal power plants, the methodology provides that the long term coal linkages should be assigned to the respective State or Central notified agencies, and the contract quantity shall be consolidated at such State or Central notified agency level. The methodology provides that under a supplementary agreement, each individual thermal power plant shall be allocated an annual contract quantity from time to time, based on the methodology as computed by the Central Electricity Authority (CEA) therefore leading to more efficient and flexible utilization of coal by the thermal power plants.
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