The board of Coal India Ltd (CIL), on Monday, agreed on the contentious issue of the draft fuel supply agreements (FSAs) that are to be signed with the power plants following a Presidential directive issued earlier this month.

After an over six-hour-long session held at CIL's headquarters here, the full board concurred on the matter. CIL's acting chairperson Zohra Chatterjee told reporters that “The main agenda of this meeting was the issue of signing FSAs and the board has agreed on it after deliberations on the draft”.

Penalty clause

The penalty clause had been pegged at a minimal level, she said.

“It is at 0.01 per cent after three years,” she said following persistent queries on the figure. This would mean that the penalty clause has been fixed at 0.01 per cent of the value of shortfall in supplies, as against the 10 per cent prevalent now.

She said that as per the directive, the FSA would have to be signed by April 20.

To a question on whether the issue of e-auction had been discussed, she said that e-auction would continue as before. She also said that the issue of imports would be decided later as it was more important to concentrate on coal production now. “Import is one of the ways of meeting the shortfall.”

No problem in first two years

Later, a CIL board member clarified that no problem was being envisaged during the first two years as all the power plants would not come rightaway.

“The demand would be high during the third and the fourth year and that is when the situation would become challenging.” The PMO had asked CIL to sign FSA with all plants that get commissioned between April 2009 and December 2015 and which have offtake arrangements with discoms (distribution companies).

At present, CIL has some 19 FSAs with power plants which got commissioned till March 31, 2009. It will have to sign 23 more FSAs now.

The signing of the FSA would begin once the draft document is put up on the CIL website.