The differences between the Power and Coal Ministries over the signing of the fuel supply agreements (FSAs) escalated further with the Power Ministry seeking a review of a few clauses of the modified FSAs. The deadline for signing them is November 30. In a communication to the Coal Secretary, S. K. Srivastava, Power Secretary Uma Shankar pointed out that the concerns expressed by the Power Ministry regarding the clauses in the model FSA continue to be part of the modified FSAs put out on the website by Coal India Limited (CIL). “I urge you to instruct CIL to suitably amend the objectionable clauses duly addressing the concerns of power developers,” the letter added.

The Power Ministry has strong objections to the issue of unilateral termination right vested in CIL for terminating the coal supply agreement at 30 days notice. The Ministry is of the view that any termination of coal supply or distribution contract should be with the Central Government and not CIL. Similarly, the modified FSAs do not have any provision for inter-project transfer of coal. The Power Ministry wants the provision of inter-project transfer may be explicitly mentioned in case of Central and State PSUs.

The modified FSA provides purchaser in no circumstances to refuse to accept the imported coal. However, the Power Ministry has suggested incorporation of clause that purchaser shall have the right to refuse to accept the imported coal if there is deviation in coal specification from that as earlier agreed upon and if the price offered is not as per agreed formula based on international bench mark price.

The FSA also has a clause which states that supply of imported coal shall be made as per availability and no restrictions should be put for quarterly distribution.

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