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Mar 30, 2012, 10.56 PM IST | Source: CNBC-TV18

Coal ministry certain CIL will be able to sign FSA

The ongoing controversy of Coal India signing fuesl supply agreement FSA took another turn today with the coal ministry claiming that such a deal will happen as it will ensure the public sector giant achieves its target.

The ongoing controversy of Coal India signing fuel supply agreement, FSA, took another turn today with the coal ministry claiming that such a deal will happen as it will ensure the public sector giant achieves its target, reports CNBC-TV18's Anshu Sharma.

In a meeting yesterday, CIL had refused to comply to a government directive asking it to ensure supply of 80% of the committed quantity to power companies by March 31. The company board, after a detailed study of the FSA clauses, had decided to approve the draft without committing on quantity.

However, today the coal ministry said once FSAs were signed, power companies will ensure PPAs (power purchase agreement) were fully adhered to. The independent directors have now sought that penalty be reduced if the company fails to meet the FSAs. According to the draft, CIL will be slapped a 40% penalty on pro rata basis if FSA goes below 80%. So far the company has not paid any penalty. 

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