Coal India Limited (CIL) is understood to have inked fuel supply agreements (FSA) with five power companies for minimum assured coal supply as per directions of the Central Government.
So far, five firms, including Lanco Anpara Power and Bajaj Hindustan, have signed the FSA with CIL and more are likely to follow in the next few days. Earlier this month, the government had issued a directive to CIL to commit a minimum of 80 per cent of fuel supply to power producers, failing which it would attract penalty.
The next in line could be the public sector firms and then all the 48 companies could sign FSA with CIL. However, officials in the Coal Ministry said no fixed deadline could be given for signing of the FSAs.
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The development follows CIL dispatching the model format of FSAs to its subsidiaries for signing pacts with power developers that have entered into long-term power purchase agreements with distribution companies.
The model format includes clauses such as suspension of supply of coal to power firms if they were found diverting the dry fuel for any purpose other than the specified end-use plant. It also includes clauses such as 80 per cent trigger level and penalty of 0.01 per cent in case of failure to adhere to it.