India: CIL extends removal of performance incentive for another year
Non Coking
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14 Jun 2021, 18:21 IST
Steel Mint Insights

Coal India Ltd (CIL) has decided to continue with the waiver of performance incentive for coal supplies to power utilities for FY '22 and onwards. The decision is to be reviewed at the end of current fiscal.

Under the provision, power producers can avail of coal supply in excess of the annual contracted quantity (ACQ) without having to pay additional amount in the form of performance incentive.

In order to provide much-needed financial relief to the customers, relaxation in performance incentive was provided in phases during the previous fiscal.

Initially, the norm was removed for the half year period of FY '21 (Apr-Sept '20), then this decision was extended till Dec '20. Thereafter, it was further extended for the final quarter (Jan-Mar '21).

CIL has stated that waiver of the performance incentive would be applicable for both government and private power plants lifting coal under the LoA route as well as for FSA route under the SHAKTI scheme.

However, it would only be permitted to those plants where all the undisputed outstanding dues have been cleared and payments have either been made in advance or through the lrrevocable Letter of Credit (IRLC)/Usance LC throughout the financial year and that there has not been any default.

The current arrangement extended support to the power sector which has already been permitted a trigger level of 80% under the fuel supply agreement (FSA) for this fiscal. However, it has been clarified that being a bilateral agreement, the provision this time would not be mandatory, but optional for the coal consumers.


14 Jun 2021, 18:21 IST



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