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Updated: August 8, 2012 00:00 IST

FSA issue: CIL board is for staggered level of penalty

Special Correspondent
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Coal India CMD S. Narsing Rao. File photo
The Hindu Coal India CMD S. Narsing Rao. File photo

Gives consent for importing coal

The board of Coal India Ltd (CIL) has agreed to a staggered level of penalty ranging from 1.5 per cent to 40 per cent for failure to meet supply commitments to power companies.

The board also concurred to amend the April 16 model for fuel supply agreements (FSA) while also giving its consent for importing coal for attaining a trigger level of 80 per cent (of the contracted quantity). Further, the board also gave its in-principle nod for pooling the price of domestic and imported coal.

These decisions are in line with the advisory sent to CIL by its parent ministry in end-July on action to be taken for breaking the deadlock on FSAs.

CIL Chairman S. Narsing Rao said that the penalty would vary between 1.5 per cent (for supplies varying between 65 per cent and 80 per cent) and 40 per cent of the value of short supplies of fuel, if supplies dropped below 50 per cent of the contracted quantity.

However, the price-pool decision would need to be ratified by the Power Ministry since it might lead to an increase in average price of fuel leading to a hike in electricity costs.

The decisions came after a four-hour meeting in New Delhi on Tuesday.

The April 16 board-meet had agreed on a penalty of 0.01 per cent, leviable after three years for a trigger level of 80 per cent.

It failed to find many takers with only 19 power suppliers signing the pact. NTPC and other major buyers had refused to sign the pact saying that it was biased.

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