PMO asks Coal India to sign FSAs by November end

The Prime Minister's Office today directed state-owned Coal India (CIL) to sign all fuel supply agreements (FSAs) by November end. Besides, the PMO has asked the Power Ministry to verify and apprise the Coal Ministry on long-term  power purchase agreements (PPAs).

The Inter-Ministerial Group (IMG) on coal block review will be made a permanent body under the Coal Ministry, the PMO said.

Last month, Power Secretary P Uma Shankar had asked CIL to sign the FSAs in two weeks’ time. "CIL’s inability has jeopardised investment in power sector. The company should ensure that there is adequate coal supply as it has not signed FSAs after 2009,” he had said.

However, CIL has maintained that there will be no negotiations with regard to supply of 15 per cent of imported coal on cost-plus basis as part of FSA. Responding to queries whether there will be no negotiations on imported coal price, Chairman and Managing Director (CMD) S Narsing Rao said: "Absolutely... it is a deemed delivery, then my commitment remains up to 65 per cent."

On September 18, the CIL board had approved the modified FSA without price-pooling with 65 per cent domestic coal and 15 per cent imported coal at cost plus basis.

The meeting on fuel supply agreement also had officials from Power Ministry like Joint Secretary (Thermal) I C P Kesari among others.

When asked whether penalty and imported coal was also discussed during the meeting, he said: "That has already been sealed. It is already in draft FSA...now 65 per cent domestic coal and 15 per cent imported coal on cost plus."

However, the CMD refused to speak on price pooling. "I am not going to talk anything about price pooling...Now, we are waiting for the consent of the consumers. One or two of the consumers I think have said no."

When asked whether the PSU firm has set any deadline for signing of FSAs, he said: "We have not put the deadline yet, but one thing we can say is that till December 31 these MoUs are valid. Any thing has to be done before December 31, otherwise they (power companies) will not get coal."

The modified FSA has modifications in penalty, moratorium on penalty and some changes in force majeure which were already cleared by the board earlier, the company had said. CIL has agreed to pay penalties of 1.5-40 per cent depending on the extent it fails to supply the committed quantity of coal to power plants.

So far, 29 companies have already signed the initial FSA.