The Association of Power Producers (APP), on Tuesday, alleged grant of undue benefits by Coal India Limited (CIL) which, according to APP, drafted fuel supply agreements (FSAs) in favour of public sector companies. “Discriminatory treatment by CIL to private power producers is giving undue benefits to State-run companies,” APP director-general, Ashok Khurana said in a statement. The draft FSAs are one-sided and not in accordance with the Presidential Directive and directives given by the Prime Minister’s Office , the statement added.

APP said that the draft document still retained many of the provisions which the industry had opposed. Some of the glaring shortcomings highlighted by APP included provisions related to unilateral review with CIL being the sole authority to decide regarding termination of agreement or satisfaction of its own conditions precedent, ineffective level of penalty quantum, frivolous force majeure conditions and many other one sided provisions.

The option for arbitration regarding FSAs is only open to government companies, it said. Earlier this year, the PMO had instructed CIL to sign FSAs with plants commissioned/yet to be commissioned between December 2011 and March 2015, which was followed up by a Presidential Directive to the same effect. On the issue of right to terminate FSA, APP alleged CIL has given itself unilateral right to terminate the FSA in case of non-consensus between seller and purchaser during joint review after 5 years or in the event of any material change in coal distribution system.

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