Coal India signs fuel supply pacts with 27 power units

Entered pacts with six units of Bajaj Hindustan, others include, Lanco Anpara Power, Reliance Power, CESC

State-owned Coal India Ltd (CIL) has entered into fuel supply pacts with 27 power units, including Adani's Mundra Power plant in Gujarat.

The signings come even as the Prime Minister's Office (PMO) is slated to convene a meeting on Friday to iron out issues in the pact, mainly the penalty clause, which have kept power firms like NTPC from inking the fuel supply agreement (FSA) with CIL.

"So far, CIL has signed FSAs with 27 power units like Adani's Mundra," a source close to the development said.

"A few days back the coal PSU has entered pacts with six units of Bajaj Hindustan," the source added.

Other power units with whom the coal PSU has signed FSAs include Lanco Anpara Power, Reliance Power's Rosa Power Project and CESC.

The government had issued a presidential directive to CIL in April to sign FSAs with the power producers assuring them of at least 80% of the committed coal delivery.

The directive was given to the PSU, as it did not meet the deadline of March 31 set by PMO for CIL to enter into agreements with power producers which were facing fuel crunch.

CIL is to supply fuel to 48 power units as per the directive. Failing to provide power units a minimum of 80% fuel, of the total contracted, CIL will attract a penalty.

The PSU firm had earlier said it was difficult to give a time frame for signing all of the pacts as the company was signing FSA as and when the power companies came forward.

The model FSA format includes clauses like penalty of 0.01% in case of failure to adhere to it and 80% trigger level.

The minimum penalty clause in the FSA is a bone of contention between Coal and Power ministries, as the power companies are opposed to penalty clause which states that CIL is not liable to pay penalty for the first three years of the pact even if there is supply shortfall.

The PMO meeting is to be chaired by Prime Minister's Principal Secretary Pulok Chatterji and likely to be attended by senior Coal and Power Ministry officials, besides Chairman and Managing Director of CIL, S Narsing Rao.