Coal linkage panel allows Lanco Babandh to ink FSA with CIL

The party is given time up to December 31, 2013 for the remaining stage II clearance

Amid delays by some firms in inking of fuel supply agreements (FSAs) with Coal India, an inter-ministerial panel has allowed Lanco to enter into the pact, condoning delays in achieving milestone for its 660 MW Babandh power project in Odisha.

The Standing Linkage Committee (Long-Term) on Coal after noting that all milestones, barring forest clearance for 18 acres were achieved, allowed the company to sign the FSA saying it will take effect only after submission of remaining stage II clearance by December 31.

"The Committee took note of the fact that all milestones except stage II forest clearance for 18 acres out of 947 acres have been achieved. Out of the 947 acres, more than 90 per cent land has been acquired which is free of forest," the Standing Linkage Committee (SLC) said in an official document.

It said there has been substantial progress on meeting the milestone and  "MCL (Mahanadi Coalfields - CIL subsidiary) may verify this and satisfy itself. For the remaining stage II clearance, the party is given time up to December 31, 2013."

The SLC said: "It (Lanco Babandh) may sign FSA which shall take effect only after submission of remaining stage II clearance within the stipulated time December 31, 2013. In view of the above delay in achieving milestones is condoned."

Letter of Assurances for linkages to the power firm was approved in August 2007 for a quantity of 2.83 MT from MCL for unit 1 & 2 for 660 MW capacity.

Earlier this month, during the SLC meeting, the company pleaded that "... Only the forest clearance was pending for reasons beyond the control of developer and project is already in advance stage of construction. Therefore the unit may be allowed to sign the FSA subject to the condition that coal supply will only start after obtaining stage II forest clearance."

The Coal Ministry had set a deadline of August 31 for signing of FSAs which could not be met and was extended to September 6.

So far, Coal India has entered into fuel supply agreements with 142 power plants. CIL has to sign 173 FSAs for a capacity of 78,000 MW.