Power Ministry seeks more changes in model fuel supply agreement

Power Ministry seeks more changes in model fuel supply agreement

The Power Ministry has sought a few changes in the model fuel supply agreement that Coal India Ltd has to sign with power firms by the November-end deadline set by the Prime Minister's Office (PMO).

"The Power Ministry, in a letter recently written to the Coal Ministry, has asked for a few more changes in the model fuel supply agreements (FSAs). The changes include, joint sampling of coal at the unloading point among others," a government official said.

"In the letter to the Coal Ministry, the Power ministry has stated that FSAs should be consumer friendly," he said.

The Prime Minister's Office (PMO) had last month asked power companies to sign FSAs by November-end even if they don't have binding pacts for sale of electricity.

It was decided during the meeting 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 consumers.

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

Even those power producers, who currently have not signed 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 India Ltd (CIL).

The state-owned firm is likely to enter into pacts with 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.