Coal and power ministries to discuss the fuel supply agreement tomorrow

NEW DELHI: The issue of power generators signing fuel supply agreement with CIL is expected to figure prominently in the meeting between coal and power ministries tomorrow.

"Coal Ministry has called a meeting with the officials of the Power Ministry tomorrow. In the meeting, the ministry will ask the the Power Ministry to start telling power firms, including NTPC, to begin signing FSA with Coal India as all their issues with regard to model FSA like penalty has been addressed now," an official in the Coal Ministry said.

CIL board had last month approved the modified fuel supply agreement (FSA) without price-pooling with 65 per cent domestic coal and 15 per cent imported coal at cost plus basis.

"We have reviewed the modified FSA and it was approved by the board. The modified FSA, which can be signed now, will have 15 per cent imported coal component at cost plus basis," CIL Chairman and Managing Director S Narsing Rao had said.

NTPC and many power companies have refused to ink fuel supply pacts with CIL, disagreeing with introduction of new clauses, including penalty.

The modified FSA has modifications in penalty, moratorium on penalty and some changes in force majeure which were already cleared by the board earlier, the company said.

CIL agreed to pay penalties of 1.5-40 per cent depending on the extent it fails to supply the committed quantity of coal to power plants.

So far 29 companies have already signed the initial FSA.