Power ministry in talks with coal ministry over penalty clause in FSA

NEW DELHI: The power ministry is in talks with the coal ministry over the controversial penalty clause in fuel supply agreements and hopes to sign pacts with amended conditions soon, a government official said today.

"We are not happy with the penalty clause, we are in discussions with the Coal Ministry regarding the same," Power Secretary Uma Shankar told reporters here.

"We hope to finalise the points and also hope to sign the FSA with the conditions that we want," he said.

Coal India, which is under the administrative control of coal ministry, has been asked to sign fuel supply agreements (FSAs) with power plants committing a minimum of 80 per cent of fuel supply, failing which it would attract penalty.

The minimum penalty clause in the FSA is a bone of contention between the two ministries.

Coal India had suggested a 0.01 per cent penalty on not delivering the fuel in time, but the penalty would only be applicable after three years of signing the pact.

NTPC and many other power companies had refused to ink fuel supply pacts with Coal India, disagreeing with introduction of some clauses in FSAs.