A new payment facility, earlier extended only to big power generating companies, will now be extended to non-regulated sectors (NRS) such as steel, sponge, cement and aluminium industries by Coal India Ltd. (CIL)
Buyers will now be given a ‘letter of credit’ and thus, they do not need to make 100% advance payment as earlier. The facility is extended to micro, small, medium enterprises and independent power plants as well. In 2018-19, about 73 million tonnes (MT) of coal was supplied to the NRS sector, of a total coal offtake of 608 MTs, CIL said in a release.
CIL board green-flagged the proposal to extend the “letter of credit” facility, allowing the sectors “the payment of coal value through irrevocable revolving letter of credit mode for coal supplies through rail mode,” the release noted.
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NRS customer base is large and working capital blockage in coal movement, of late, was found to have a bearing on the firms’ financial health. The release, quoting a CIL official, who said that with the introduction of the relaxed norms “NRS customers can breathe easy” and it “will help in sustaining their growth as well.”
In a separate step, IPPs have been allowed to do inter-plant coal transfer in wholly-owned subsidiary or common holding company. This facility was earlier confined to Central and State power generation companies.