CIL asks arms to sign FSA with power units coming up by 2015

Coal Ministry, last month, directed the public sector company to enter into pacts with power units which will commission during the period

State-owned Coal India has directed its subsidiaries to enter into fuel supply pacts with power units that are coming up between January 2012 and March 2015, bringing a respite to fuel-starved power companies.

The development comes in the wake of Coal Ministry, last month, directing the public sector company to enter into pacts with power units which will commission during the period.

"Last week, Coal India (CIL) wrote to its subsidiaries asking them to enter into fuel supply agreements (FSAs) with power units to be commissioning between January 1, 2012 and March 31, 2015," a source close to the development said.

Coal India has nine subsidiaries, including Mahanadi Coalfields Ltd and Eastern Coalfields Ltd.

Earlier, the media had reported that CIL will seek advice from Prime Minister's Office (PMO) through the Coal Ministry on how to go about signing FSAs with power plants for three years.

The PMO had asked CIL to sign FSAs with plants that have come up after April, 2009 and will be set up till March, 2015 by March 2012.

A Presidential directive was issued to Coal India to enter into fuel supply pacts with power plants commissioned between April 2009 and December 2011. The directive, however, did not mention anything about plants that came after January 2012.

Till last week, the PSU entered into FSA with 14 firms, including Reliance Power's Rosa Power project, Lanco Anpara Power and Bajaj Hindustan.

In April, the Coal Ministry had issued a directive to CIL to commit a minimum of 80% of fuel supply to power producers, failing which it would attract penalty.