Single FSA for PSUs and private coal consumers

On Friday, both the ministries came to an agreement and had said that power companies will sign pacts for 7,250 MW

With both the power and coal ministries’ vowing to break the logjam on fuel supply agreements (FSA), Union coal minister Sriprakash Jaiswal said today that there would only be a single draft fuel supply agreement for both public and private power companies, contrary to the revised FSA draft cleared by Coal India board in September.

“There will be no separate FSAs. There will only be one single FSA for both private and public parties. However, we would not change the draft...... power companies have agreed to sign it with in a month,” Jaiswal said, on the sidelines of a Srei Foundation event.

The board of CIL had cleared the revised draft FSAs in September. One of the major issues that was raised by the critics against the CIL draft FSAs was the “discrimination” between public and private power firms.

CIL had come out with separate draft FSAs for public and private firms, where public firms had the advantage as far as security deposit and arbitration clauses were concerned. “The major difference was that government parties had the advantage of getting the security deposit refunded after a point of time and had the right to go for arbitration,” said a top CIL official.

When asked about the government move, Ashok Khurana, Director-General of Association of Power Producers (APP) said, “We welcome the decision as there will be a level playing field between the private and public parties now. Now, the government may remove those discriminatory clauses and will come out with a fresh FSA, with minor changes.”

On Friday, both the ministries came to an agreement and had said that power companies will sign pacts for 7,250 Megawatt (Mw) capacity soon.

CIL had revised its FSA norms following protests by power firms including NTPC, revising penalty slabs, doing away with moratorium. The board has also cleared a cost price model for signing of FSAs, which will provide imported coal at actual cost. CIL had also agreed for a penalty ranging from 1.5% to 40% on failure to meet supply commitments.

Meanwhile, Jaiswal said that the group of ministers would meet with in a week to decide on the draft of Coal Regulatory Authority Bill.