Coal sampling results to be binding even if buyer stays away

Results of a proposed sampling of domestic coal to be supplied to power projects will be binding on both the seller and the buyer even if the purchaser declines to participate in the process.

Refusal of the buyer to take part in the sampling process will not be considered "as ground for disputing the result submitted by the third party, which will be binding on both parties," the Coal Ministry said in a communication.

The third-party sampling mechanism, to be in place by the end of this year, is expected to help address issues related to the quality of supplies from Coal India to power project developers. Third party refers to the agency that will collect, prepare and analyse coal samples.

The Coal Ministry recently informed the Power Ministry about various clauses to be incorporated in Fuel Supply Agreements signed between Coal India and power producers once the new sampling system starts.

Any dispute on the outcome of sampling has to be raised within two days of the date of analysis by the third party. The party disputing the results should bear the cost of further analysis, including transportation of the sample to a government laboratory, the ministry said.

Where third-party sampling is not possible, joint sampling and analysis have to be conducted by the seller in the presence of the purchaser, it said.

Fuel supply pacts for projects with a total generation capacity of about 78,000 MW are in the process of getting signed with state-run Coal India.