Draft CIL fuel supply pact with power cos in final stage

A contentious clause in the model Coal India (CIL) agreement with power generating firms, under which world's largest coal producer would commit itself to supply at least 80% of the fuel to these users, is in the final stage of completion.

"It [Fuel Supply Agreement] is in the final stages. There has been some technical problems  and they are being addressed," Power Minister Sushilkumar Shinde said.

The CIL board has been meeting for the last two days to resolve the issue, amid reservations from some of the independent directors and legal threat from the UK-based hedge fund, TCI, which is a minority shareholder in the company.

After meeting with the power sector honchos, Prime Minister's Office (PMO) had directed the CIL last month to ink FSAs with 80% supply commitment before March-end for power plants which have been commissioned on or before December 31, 2011.

However, the PMO direction did not find favour with independent directors of the CIL, which is a listed and traded PSU. The minority shareholders also questioned the move.