Coal India modifies provisions in model FSA to power plants

State-run Coal India has made changes with regard to certain provisions of model fuel supply agreement (FSA) applicable to new power plants, amid Coal India and NTPC at loggerheads over coal quality issue.

"It was discussed (during the meeting) that suitable modification in respect of certain provisions of the new power FSA models are required...accordingly certain provisions in the model FSAs applicable to the new power plants are modified," Coal India said in a letter to its subsidiaries.

Also read: Coal India, NTPC end year-old scuffle on coal pricing

The Coal major further said that modifications in the model FSAs would be applicable not only to new power plants but also to new non-power consumers, adding that "references were also received in this regard (changes in model FSA) from the subsidiary coal companies."

The modifications includes with regard to power purchase agreement and compensation for oversized stones, among others. The development comes at a time when quality of coal has become a contentious issue between the two state-run companies- NTPC and CIL.

Power producer NTPC had refused to sign the FSA with CIL saying the quality of coal supplied by the coal PSU was poor and could even cause damage to its machinery.     

NTPC power plants need coal of minimum 3,100 kilocalories but CIL at times has supplied coal with average heat generating capacity of about 2,100 kilocalories, according to the power company.

Earlier this month, CIL snapped supplies at a few NTPC stations as the former alleged that the power producer was not making regular payments to the company.  So far 60 power generation companies have signed FSAs with CIL.