CIL Inks Fuel Supply Pacts With Five Power Firms

NEW DELHI: State-owned Coal India Ltd (CIL) has so far entered into fuel supply pacts with five power firms for minimum assured supply of coal as per a government directive.
“So far five firms have signed fuel supply agreements with CIL, including Lanco Anpara Power and Bajaj Hindustan,” a source in the know of the development said.
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 directive was issued following a meeting between the power sector honchos and the Prime Minister’s Office.
Independent directors had objected to any government direction to CIL, which is listed on the stock exchanges.
On when will the Maharatna firm be able to sign FSAs with all the 48 power companies, the source said, “It is difficult to give a time frame as CIL is signing pacts as and when the power companies are coming forward.”
The development follows CIL dispatching the model format of fuel supply agreements (FSAs) to its subsidiaries for signing of pacts with power developers that have entered into long-term power purchase agreements with distribution companies.
CIL board had last week approved signing of the agreements with power producers for minimum assured supply of the fuel, following a directive from the government.
The state-owned firm is likely to enter into pacts with firms having a capacity of less than 30,000 MW.
The model format includes clauses like 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.
The model format also includes clauses like 80 per cent trigger level and penalty of 0.01 per cent in case of failure to adhere to it.