CIL puts off board meet for 4th time

Dashing hopes of an early resolution of the fuel supply logjam between Coal India (CIL) and power firms, the state-run company has postponed its board meeting, earlier scheduled for tomorrow, to next week.

One of the primary items on the agenda for the meeting was signing of fuel supply agreements (FSAs) with power companies. When asked about the postponement, a senior company official said, “It is in view of the Parliamentary standing committee meetings on Monday and on July 11 that it has been postponed.”

This is the fourth time the board meeting has been postponed. Sources privy to the development said though the next date was not finalised, it was “likely to be held next week — either on July 16 and 17”.

New FSAs are a bone of contention, as a lot of power producers, including NTPC, had expressed dissent over the introduction of new clauses, including a penalty of 0.01 per cent of the value of shortfall, if the firm failed to deliver 80 per cent of the committed coal. Following this, the Prime Minister’s Office (PMO) had intervened last week, breaking the deadlock.

At a meeting with PMO officials last month, Chairman and Managing Director S Narsing Rao had proposed the miner commit to supplying coal at 65 per cent of the annual contracted quantity for the first three years, and increase this to 80 per cent in the fifth year of supply.

Reportedly, Rao had also proposed doing away with the contentious penalty clause in the FSAs.

“These issues would be discussed in the board meeting. The Central Electricity Authority and the power ministry are also seeking feedback from state power utilities regarding the clauses,” Rao had said.

Till date, CIL has signed 27 FSAs. “We expect the issues to be sorted out within this month. Till June, the total number of firms eligible to sign FSAs has increased to about 80. So, more firms are likely to sign it,” said a senior company official. Adani’s Mundra plant, Rajasthan Rajya Vidyut Utpadan Nigam, Lanco Anpara Power and Bajaj Hindustan are among those that have signed FSAs.

CIL had started signing FSAs after a Presidential decree in March directed it to abide by the instruction of the Prime Minister’s Office and sign agreements with power firms. This has forced the company to rethink its strategy on imports to meet domestic demand, though imports may hit the company’s profit.

Last week, the coal ministry had said a final decision on whether the Kolkata-based firm would opt for imports would be taken by the end of this month. According to Coal Minister Sriprakash Jaiswal, a decision on whether the company would continue with special purpose vehicle International Coal Ventures would also be decided after that.