CIL tweaks basis to determine security deposit for power companies

Company has so far signed 160 fuel supply agreements with power units

State-owned Coal India (CIL) has modified basis for determining security deposit pertaining to the fuel agreements agreements (FSA) for the new power plants.

"Under the model FSA applicable for the power plants (including tapering models), where multiple grades of coal are indicated under the schedule of grades/types of coal to be supplied, presently the security deposit (SD) amount is determined based on the base price of the highest grade of coal," the CIL said in a letter dated April 17 to its subsidiaries.

"The basis for determining such SD amount has been modified and shall now be based on simple average price of grades of coal as mentioned in the schedule," it said.

Accordingly, the relevant FSA provision shall stand modified with immediate effect, it said.

"This is for your taking necessary action in this regard," it added.

Security deposit is the sum of money which the power producer deposits before signing fuel supply pacts with the coal PSU.

The maharatna firm had recently tweaked the fuel supply pact model for new private power plants providing them an opportunity to amend/supplement the power purchase agreement (PPA) more than once a year.

Amid continuous delays, CIL has so far signed 160 fuel supply agreements (FSA) with power units.

The Cabinet Committee on Investment (CCI) had earlier stated that the timelines for signing of fuel supply pacts for power projects of 78,000 MW capacity should be met.

"As of now Coal India has signed 160 fuel supply agreements (FSAs). There are still some more to be signed," a Coal India official had earlier said.

Power projects with 78,000 MW capacity have been approved for coal supplies by the Cabinet Committee on Economic Affairs (CCEA).

"(Overall) 177 LoAs (Letter of Assurances) were issued by CIL and its subsidiaries for power projects to be commissioned during the 11th and the 12th Five year Plan. These LoAs cover a capacity of about 1,08,000 MW," according to a Coal Ministry document.

Two deadlines set for the signing of FSAs by CIL with the power producers could not be adhered to. The Coal Ministry had set the deadline of August 31, 2013 for signing of the FSAs, which could not be met. The second deadline was set for September, last year.