Coal India on Monday said it would introduce a uniform interest rate on delayed receivables, adjustments and recoverable sums, effective October 1. The uniform repo rate plus 3 per cent will apply to coal sold under the fuel supply agreement (FSA).

The move follows representation from the coal consumers who had sought a revision of the lopsided interest rate. Earlier, interest rates on delayed payments used to hover around 9.5 per cent and 14.85 per cent under several FSAs. The repo rate is currently at 6.6 per cent.

“The new interest rates are applicable for the delay in payments beyond September 30. The interest rates for the period till September 30 shall be charged as stated in the FSAs,” Coal India said.

“Differently ranged bank lending rates were also viewed as a factor that may be disputed by the customers while paying interest on late payments. The RBI repo rate being a benchmark and periodically reviewed by the country’s central bank, was considered while making a uniformly applicable rate of interest across different types of FSAs,” Coal India said.

The move is expected to be beneficial for both coal consumers as well as Coal India. While the financial burden for coal consumers will ease with lower interest on delayed receivables through consumer-friendly measures, Coal India stands to benefit from a better offtake at a time the demand for coal has slackened.

Coal production in August was down 11.9 per cent year-on-year while offtake was down 11.8 per cent. Between April and August, total production was at 290.4 million tonnes (mt), up 3.2 per cent.

Coal India said for FY25, its total annual contracted quantity under FSA is 705.7 mt. The total production target for FY25 is estimated at 838 mt.

Earlier in August, the miner said it had done away with the provision that allowed coal supplies up to 120 per cent of annual contracted quantity to power plants and independent power plants allowing generating companies to lift coal according to their requirement above the annual contracted quantity.