CIL to sign FSAs with over 70 power stations soon

Close on the heel of the signing of the Fuel Supply Agreement (FSA) between Coal India Limited (CIL) and National Thermal Power Corporation (NTPC), the Navratna coal firm expects to sign FSAs with over 70 power generating stations across the country within a month. After entering into FSA with NTPC, we expect to sign FSAs with over 70 power generating stations in the country within a month, a senior CIL official told Business Standard.

After months of tussle especially over the issue of trigger level of coal, CIL and NTPC, India’s largest power producer, eventually signed the FSA on May 29 this year. According to the agreement, both parties had agreed for a trigger level of coal at 90 per cent.

Trigger level is the minimum assured level of coal supply and offtake, failing which both the coal supplier and the consumer would attract penalty. Though FSA was introduced in the New Coal Distribution Policy of the Union coal ministry in 2007, the agreement was delayed mainly on account of the deadlock between CIL and NTPC over the contentious issue of trigger level of coal. The demand to raise the trigger level to 90 per cent was made by the power producers amidst inadequate coal supplies which had slipped many power plants in the country into the critical and super critical states with coal stocks of less than seven days and four days respectively. The tenure of the FSA with power utilities will be a maximum of 20 years or till the end of the life of the power station, whichever is earlier.

After the signing of the FSA between CIL and the different power producers, including NTPC, the coal stock position at the power generating stations was expected to improve as the long-term pact between the producers and the consumers was aimed at ensuring a dedicated supply of fuel. However, the power plants would continue to reel under critical and super-critical conditions with respect to coal stock if they did not import their balance requirement of coal in sync with their rising power production.

On its part, CIL had committed a supply of 312 million tonnes (mt) of coal to power utilities in this fiscal compared to 292 mt which the navratna coal PSU (public sector undertaking) provided in 2008-09. Moreover, to streamline coal movement, the coal PSU had asked all its subsidiaries to prepare a month-wise rake requirement list. The CIL subsidiaries were expected to come out with their respective rake requirement list soon following which the coal PSU was to take up the issue of rake requirement with the Indian Railways.