PMO to meet next week on CIL's 65% assured supply to power cos

The Prime Minister's Office has called a meeting next week to resolve the issues related to fuel supply pact, with the Power Ministry not agreeing to the PMO directive that CIL assure power firms of providing 65% of the total coal contracted.

"The Power Ministry is saying that banks are not accepting 65% trigger level (for penalty on CIL), as against the earlier directive of 80% supply assurance. The PMO has called a meeting next week to further deliberate on the issue," sources close to the development said.

The issue was also discussed a the meeting called by the PMO last week. The meeting, chaired by Principal Secretary Pulok Chatterjee, was attended by Coal Secretary S K Srivastava, Power Secretary Uma Shankar and CIL Chairman and Managing Director S Narsing Rao.

On June 22, the PMO had asked state-owned Coal India Ltd (CIL) to sign the fuel supply agreements (FSAs) with power producers assuring them of a minimum supply of 65% of the total contract.

The PSU had also been asked to import coal through the state-owned agencies like STC and MMTC.

CIL had its way in terms of making much lower commitment for the assured supply of 65% for the first three years of FSAs, from 80% directed by the PMO earlier.

But in the fourth year, the supply has to increase to 72% followed by 80% in the fifth year of the agreements, sources added.

Meanwhile, Coal Minister Sriprakash Jaiswal said, "Discussion with the Prime Minister's Office is underway on FSA. I am hopeful that the issue will be resolved in 15 days and remaining pacts will be signed."

CIL, which missed the revised production target last fiscal and produced 435 million tonnes of coal, has set a production target of 464 MT for 2012-13.