PMO steps in to ease Coal India's FSA tiff with power cos

Coal India had earlier said that the current production plan would not allow the PSU to sign FSAs above the 65% trigger level, while the PMO agreed to increase the trigger level to 80%.

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The PMO convened meeting with the coal secretary, advisors and the CMD of Coal India and concluded a 65% trigger level would be maintained for the first three years. Coal India has been directed to increase the trigger level from the fourth year by 65-80%, indicate sources.

The PMO has also asked Coal India to increase the penalty decided by the board by 0.01%. Before the last decade, the penalty was 10% to 40% for any shortfall. The PMO also made it very clear that the penalty will have to be increased and to meet the shortfall through imports.

The PSU has also been asked to work on a system of price pooling and discuss with the secretaries at companies regarding coal imports.

So, the resolution of the FSAs is sure to be on top of the agenda when the Coal India board meets on July 8.