While Coal India Ltd (CIL) has signed at least 10 fuel supply agreements (FSAs) with power companies, concerns of the country’s largest power producer, NTPC, are yet to be settled.
NTPC, also owned by the Central government, had refused to sign new FSAs, saying there was no supply guarantee. It was expected to approach the power ministry to intervene. When asked whether it had requested the ministry, Chairman Arup Roy Choudhury said, “We are taking up the issue directly with CIL.”
Clauses like the penalty of only 0.01 per cent of the value of shortfall if CIL fails to deliver 80 per cent of the committed coal had invited ire from power firms. The current penalty is 10 per cent if the firm fails to meet the trigger level.
CIL initiated the process of signing FSA, after a Presidential decree directed the Kolkata-based firm to abide by the earlier instruction of the Prime Minister and sign FSAs with companies that had set up plants by the end of 2011.
However, a top NTPC official said, “It is not possible for us to sign FSAs with the present clauses. How can we sign two sets of FSAs for the same power plants? Moreover, the present penalty clause is not guaranteeing any fuel security for us.”
Meanwhile, a top official in the CIL’s marketing department said the company had signed 10 FSAs till now, while 38 were in pipeline. “This includes three units of PSUs and seven of private firms,” he said.