NTPC Won't Sign Separate Fuel Supply Agreements For New And Old Units

KOLKATA: NTPC will not sign separate fuel supply agreements (FSAs) for new units and old units at the same power station as is now required by Coal India. It intends to sign the same set of contracts – the one it has already signed for some of its units.
The company will be consuming almost 50% of the incremental coal that will be supplied by Coal India Ltd (CIL) under the new draft agreement.
“We have written to Coal India expressing our intention because it is not practically possible to sign two sets of fuel supply agreements for different generating units of a single power station. We would like to sign the same old set for the new units as well,” NTPC chairman Arup Roy Choudhury told ET.
Following a presidential directive, Coal India has prepared a new draft of fuel supply agreement that it wants to sign for units which have come up between April 1, 2009 and December 31, 2011. This draft is different from the ones that NTPC has signed for units installed prior to April 2009.
The new draft contract has fixed the penalties in case of supply falling below 80% of the committed amount to 0.01% which will be effective after three years while the penalties for existing agreements are 10%. The new draft agreement has also introduced a number of force majeure clauses not existent in the previous agreements.
NTPC has installed a total capacity of 4,300 mw that has come up between April 2009 and December 2011 and all of which is brownfield expansion, meaning these units have come up at its existing stations.
“The entire 4,300 mw has been installed as new units in thermal power stations of Dadri, Korba, Sipat, Simahdri, Kahalgaon and Farakka,” Roy Choudhury said.
Coal India chairman, S Narsing Rao, when asked on the issue said: “NTPC has got in touch with us and has expressed their concerns. We will examine NTPC’s proposal and take a decision accordingly if it is found fit. However, a draft FSA has been prepared for them to sign and we may need our board’s approval if we have to diverge.”