CIL board to discuss draft fuel supply pact again tomorrow

The board of Coal India (CIL) will meet again tomorrow to approve the new draft fuel supply agreement, as today's discussions on the issue remained inconclusive.

"CIL board met today and the clauses in the fuel supply agreement (FSA) were discussed. Since it is a huge document all clauses could not be discussed. The remaining clauses will come up for discussion tomorrow," sources said.

The Coal India board meeting, held on March 22, had remained inconclusive in the wake of its independent directors resenting a clause in the FSA for ensuring at least 80% supply of the commitment to the power plants.

The independent directors, according to sources, are opposed to the clause stating that the PSU facing problems in enhancing coal production was not in a position to meet the commitment.

The development comes in the wake of Prime Minister's Office (PMO) last month directing the CIL to ink FSAs with 80% supply clause before March-end for power plants that have been commissioned on or before December 31, 2011.

Amid power plants facing a supply crunch, the 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.

It had elaborated that if the supply remains below 80%, then CIL would be penalised and would be provided incentives if it was found above 90%.

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