Power Ministry asks NTPC to sign fuel supply pact with Coal India

Power Ministry asks NTPC to sign fuel supply pact with Coal India
New Delhi:

With the deadline set by the Prime Minister’s Office (PMO) for signing of fuel supply pacts drawing near, the Power Ministry has asked state-owned NTPC to ink the agreement with Coal India (CIL) for the supply of the fuel.

"Recently, the ministry wrote a letter to NTPC asking it to sign fuel supply agreements (FSAs) with CIL," an official said.

The PMO had last month asked power companies, including NTPC, to sign FSAs by the month-end even if they don't have binding pacts for sale of electricity.

Pulok Chatterji, Principal Secretary to the Prime Minister, had convened a meeting to sort out issues impeding the signing of FSAs between CIL and power producers.

It was decided during the meeting, the official said, that FSAs can be signed with power companies having long-term and medium-term power purchase agreements (PPAs) based on confirmation from the Power Ministry that it is benefitting the consumers.

"Medium-term and long-term PPAs will continue subject to confirmation from the Power Ministry that it is benefitting consumers," a government official said.

Even those power producers who currently have not signed a PPA with any electricity distribution company can sign the FSA, but they will be required to produce the PPA before lifting coal.

So far, 30 power firms, including Lanco and Adani, have entered into pacts with the coal PSU.

The state-owned firm is likely to enter into pacts with 48 power units having a capacity of less than 30,000 MW.

The Power Ministry had earlier said that issues related to signing of FSAs with CIL would be sorted out soon and no coal-based power project would face fuel shortage in the 12th Five-Year Plan (2012-2017).

In September, 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.