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CIL board may meet next week for new fuel supply pact

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In the backdrop of government asking to ensure adequate fuel to the power sector, the company board is likely to meet this week to approve the draft of revised standard agreement.

"Coal India's board is likely to meet later this week to seek the approval for the revised standard draft of Fuel Supply Agreement (FSA)," according to top Coal Ministry official.

The proposed meeting comes close on the heels of Prime Minister's Office (PMO) announcing last month that Coal India (CIL) would ink FSAs before March-end, for power plants that have been commissioned up to December 31, 2011.

"Certain clauses in the FSA are revamped and the board will take up these issues during the proposed meeting," the officials said.

However, they did not disclose specific details.

Acute coal shortage is hurting the generation capacity in the fast-growing power sector.

In his Budget speech, Finance Minister Pranab Mukherjee said that CIL has been asked to sign FSA "with power plants that have entered into long-term Power Purchase Agreements with discoms (power distribution companies) and would get commissioned on or before March 31, 2015".

Last month, PMO had said that FSAs would be signed for full quantity of coal mentioned in the Letters of Assurance (LoAs) for a period of 20 years. If the supply is  below 80%, then CIL would be penalised. On the other hand, if the supply is above 90%, then the company would be provided incentive.

In case, CIL is unable to meet the obligations, the company would have to arrange for fuel through imports or other arrangements.

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