Coal India to consider FSA with power companies on July 31

The coal giant, so far, has postponed board meetings a couple of times including on July 5 and July 10.

"The PMO had held a meeting on July 6 to resolve the issues impeding fuel supply agreements (FSAs) with power firms.
    
"We were not able to fix the date for board meeting as we had not received a written communication on the decisions taken in the meeting. Now there are indications the directions will reach us in a day or two. We have fixed the meeting on July 31," a senior Coal Ministry official told PTI.
    
The expected PMO's intervention would come amidst differences between CIL and power companies, including state-owned NTPC , over certain clauses in the FSAs which were to be completed months ago and has been adversely affecting the power generation due to low coal supplies.
    
The state-run PSU had fixed July 10 to deliberate on the issues after the PMO meet but had postponed the same. Sources had said the date of the board meeting had to be carried forward as the Coal Ministry had not received any written communication from the PMO on the decisions taken by it on the issue of assured supply of fuel to the power plants.

Certain clauses of the FSAs, including penalty, had become a bone of contention between the Coal and Power Ministries and eventually the PMO had to intervene to break the deadlock.

The Prime Minister's Principal Secretary Pulok Chatterjee held a meeting on July 6 to take stock of the situation, particularly, relating to the quantum of assured supplies of coal to the power companies.

As per the earlier directive of the PMO, CIL was to supply at least 80 per cent of the committed quantity of the fossil fuel requirements of the power firms.

Citing reasons such as production constraints, CIL had wanted it to be reduced.

The PMO meeting, as per sources, has decided that CIL would supply between 65% and 80% of the requirement of power companies, for which FSAs could be signed.

It was also decided during the meeting that CIL would place coal import order on MMTC or STC. The coal PSU would determine the mechanism for coal price pooling, sources said.

Citing introduction of new clauses in the pact, NTPC and many power companies have declined to sign FSAs with CIL. So far, only 27 power plants including that of Lanco, Reliance and Adani, out of 48, have signed FSAs with the state-run coal giant.

CIL had also been asked to look into the possibility of supplying 75-80 per cent of the assured quantity of coal in the second year under a relaxed penalty clause.
    
"In the third, fourth and fifth year, it could be 80% with strict penalty," it was suggested.
    
The government had in April issued a directive to CIL to commit a minimum 80 per cent of fuel supply to power producers, failing which it would attract penalty.