Coal India Ltd has offered deferred payment facility to both power and non-power consumers to provide relief and help improve their liquidity during the lockdown imposed by the government to contain coronavirus infection. The move has come at a time when reports suggest that power demand has declined due to the nationwide lockdown hitting cash flows of electricity distribution as well as generation companies.
"In order to provide relief to the power sector consumers and increase liquidity in the system, CIL has already allowed the facility of Usance Letter of Credit to power sector consumers for payment of coal instead of cash advance for the Fuel Supply Agreements (FSA)," the Coal Ministry said in a release on Thursday.
Usance Letter of Credit or deferred payment letter of credit is payable at a predetermined future date.
CIL has also introduced the same mechanism for customers of non-power sectors in the month of April 2020.
This shall help significantly in improving the working capital cycle of the generators, it mentioned.
It would also be a big boost to the liquidity in the markets and at the same time shall also provide the much-anticipated relief to the consumers of coal, the statement said.
State-owned Coal India has offered 550 million tonnes (MT) of dry fuel for the power sector in the ongoing fiscal, the ministry said.
Coal India accounts for over 80 per cent of domestic coal output.
