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Two decisions taken by Coal India Limited (CIL) have given much needed relief to power producers. The nation’s largest coal producer has decided to remove the ‘deemed delivery’ and ‘Level of Lifting’ (LL) clause in response to a long standing demand that power producers had made to the Ministry of Coal and Power.

Coal secretary Anil Swarup
Coal secretary Anil Swarup

Under the LL clause, the Fuel supply agreement signed by CIL with the power producer would be terminated if the level of lifting of coal fell to below 30 per cent of committed quantity. While, under the Deemed Delivery clause, coal that was not supplied to power plants due to Railway Failure (RF) was considered as deemed delivery. Hence, the power producer did not receive the coal and had to import coal at high prices, but would not be reimbursed by power distribution companies (discoms) at imported coal prices because CIL said that coal is deemed delivered. This gave rise to a lot many disputes between producers and discoms, which will be a thing of the past now.

“After we have greatly increased the production the coal, which was the top priority, we started solving legacy issues like deemed delivery and LL. Work is happening at a fast pace, and there have been many problems have been sorted for eg. only crushed coal is being delivered to customers from January 1 and issues like grade slippage are in the process of being solved,” said coal secretary Anil Swarup.

While Association of Power Producers (APP) director general Ashok Khurana said, “We welcome the decision taken by Ministry of Coal and CIL. It was our long standing demand that legacy issues like LL and deemed delivery be done away with. We are happy that a solution has been found to issues raised.”