CIL board to meet tomorrow to finalise fuel supply pact

The board of Coal India will meet tomorrow to resolve the contentious issue of penalty and finalise fuel supply agreements (FSAs) to be inked with power firms.

The Coal India Ltd (CIL) board will meet here tomorrow mainly to discuss and finalise the FSA after resolving the penalty issue, an official told PTI.

The coal major's board in its meeting on July 31, had reached a consensus on supplying a minimum of 80% of the contracted quantity of the fuel to power firms, meeting 15% through imports. As a result, it will import around 20 million tonnes of coal this year.

However, a consensus still eludes penalty issue, which has become a major stumbling block in CIL inking pacts with power firms, including NTPC.

Power firms, including NTPC, have refused to enter into pacts with CIL, dismissing the FSA on many counts including the low penalty clause for the coal major in case of its not meeting the committed supply.

The Prime Minister's Office, last month, directed the coal giant to sign the pacts with power firms for supply of 65-80% of the contracted quantity, amid delays in signing of the agreements.

CIL had also been asked to look into the possibility of supplying 75-80% 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.

However, citing introduction of new clauses in the pact, NTPC and many power companies had declined to sign FSAs with CIL.

So far, only 29 power plants including that of Lanco, Reliance and Adani, out of 48, have signed FSAs with the state-run coal giant.

The government had in April issued a directive to CIL to commit a minimum 80% of fuel supply to power producers, failing which it would attract penalty.