The board of state-owned Coal India Ltd (CIL) has given approval to renew the existing fuel supply pacts with non-power producers, but with riders.
“CIL board...accorded its approval for renewal of the existing fuel supply agreements (FSAs) with the non—power producers...with...conditions,” the company said in a letter to its subsidiaries.
Sectors such as cement and sponge iron constitute the non-power producers clientele for CIL.
Under the conditions, all consumers whose FSAs are to be renewed may be offered 25 per cent of the agreed quantity of higher grades of coal, CIL said.
“In case of non-acceptance by the purchaser such quantity shall be considered as ‘deemed delivered’,” the PSU said in the letter.
Highlighting the other condition, it further said that renewal of the agreements should be done after proper verification of the bonafide of the FSA holders.
The CIL board had also earlier approved signing of FSA with power producers even in the absence of long-term purchase pacts between generation companies and distribution firms.
A power purchasing agreement (PPA) is signed between a power producer and a buyer, usually an electricity distribution company.
So far, 62 power plants have signed FSAs with CIL. A few have refused to sign fuel supply pacts citing varied reasons.
India’s largest power producer NTPC has not entered into fuel supply pact with the coal PSU, saying CIL was supplying poor quality coal.
NTPC buys close to 140 million tonne (MT) of coal to fire its thermal power plants. The company has not signed FSAs for 4,500 MW power generation capacity.