Coal India signs two FSAs with NTPC

Coal India (CIL) and power producer NTPC on Thursday signed two model fuel supply agreements  (FSA) breaking the deadlock of nearly one year over it.

NTPC's 500 MW Kahelgaon unit in Bihar and 500 MW Farraka  unit in West Bengal signed the FSA for 2.31 million tons of coal with Eastern Coalfields, a subsidiary of Coal India, sources told PTI.

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Another set of FSAs were expected to be signed on July 17 in the presence of the chairmen of the both the PSUs, CIL sources said. A total of 29 FSAs were to be signed by NTPC for a total generation capacity of 9,000 MW. Coal India  provided about 125 to 130 million tons of coal to NTPC at present.

There were two major issues which led to the delay of over one year before a compromise was arrived at by CIL and  NTPC on FSA. One issue was how to treat the pre-2009 FSA with the 2012 FSA.

It was resolved after both agreed that the supplies received at both the stations would be met and thereafter the  surplus would be considered for incentive. Another issue was how to deal with coal which was below 3,100 kilo calories  per kg.

NTPC was not willing to accept below 3,100 kilo calories, but its board finally agreed to pay as per the new grading  and that for incentive only 25 per cent of the quantity supplied below 3100 kilo calories would be considered.