After much delay, the decks finally seem to be cleared for the signing of fuel supply agreements (FSA) between Coal India Ltd. and its single-biggest buyer, NTPC.
The Coal India Ltd. (CIL) board, which met here on Wednesday, agreed to reduce incentives proportionately if the quality of coal was poor—with a gross calorific value of less than 3100 calories. “This is a small amendment which we will make in our FSAs,” CIL chairman S Narsing Rao said.
The FSAs may be signed in two weeks time once the matter was communicated to the individual CIL subsidiaries, he said.
The issue had proven to be a bone of contention, and it was discussed in three meetings, a CIL official said adding that after this the issue was resolved. NTPC Board has okayed the issue and following the CIL board’s approval, the stage is now set for a settlement. All the 14 members of CIL’s board were present today. The trigger level for attracting incentives is 90 per cent of the annual contracted amount. However, given CIL’s capacity, only about 65 per cent of the total requirement would be met in this manner with the rest being imported.
Although quite a few companies have signed the FSAs, the objective behind the entire exercise to assure coal supplies to power plants through a budgetary announcement in 2011-12 ( and the a Presidential fiat) had been caught in web of persistent disaccord between the two major PSUs. Power companies who have not signed FSA are getting coal through memoranda of understanding with CIL or through letters of assurances.