CIL board may take up FSA for approval tomorrow

Coal India is likely to consider for approval the model fuel supply agreement with power companies in its board meeting tomorrow.

A source in the Coal Ministry said, "During the meeting likely tomorrow the model FSA would be placed for approval before Coal India board members".

CIL had recently invited companies to provide consultancy services to develop a side pact for supplying imported coal to power firms under the fuel supply agreement in case of production shortfall from domestic sources.

"In the present scenario, it is likely that there will be a shortfall in respect of domestic coal... Hence the present policy is to supply the deficit quantity of coal by import. A side agreement is required to be framed in order to deal the
terms and conditions for supply of imported coal," the company had said.

In the last board meeting the members on the board of CIL had sought some more time to go through the clauses of model FSA and the side agreement minutely.

CIL has reached a consensus on supplying a minimum of 80% of the contracted quantity to power firms.

The issue of penalty was a bone of contention as power firms, led by NTPC, opposed penalty in the earlier FSA of a "meagre" 0.01%. They had refused to ink the fuel supply agreement.

Of the committed 80% of the assured supply, CIL would meet 15% through imports and 65% through domestic production. It is estimated that CIL would need to import 20 million tonnes of coal this year to meet the demand of power companies.

So far, only 29 power companies, including Lanco and Adani have signed FSAs with CIL.