Around 27 power units face problems in signing FSAs with CIL

Around 27 power units face problems in signing fuel supply pacts with state-owned Coal India (CIL) due to the absence of letters of assurance, ownership issues and non-achievement of milestones.

"There are around 27 power units which are facing problems in signing of fuel supply pacts. While in some cases there is a problem of change in ownership, in others it is non-achievement of milestones," a source said.

Citing examples, the source said, "While Talwandi Power is facing problem in change of ownership, R K M Powergen has not achieved milestones."

The source added that some power plants are reluctant to sign fuel supply agreements (FSAs) because they don't have power purchase agreements. The units are also required to have letters of assurance from the Coal Ministry on fuel linkages.

CIL has to sign 173 FSAs with power companies for a total capacity of 78,000 MW by the month end, as directed by the Coal Ministry on July 17.

The CIL board had on August 3 approved signing of FSAs for a capacity of 78,000 MW instead of 60,678 MW earlier, the source added. The capacity of 60,678 MW was the projected requirement for 131 power plants commissioned or to be commissioned by March 2015.

CIL has so far signed 118 FSAs, including with NTPC, which had earlier raised quality issues of the dry-fuel supplied to it and had stopped payments to Eastern Coalfields Ltd, a CIL subsidiary.