distortions. Despite objection from power developers, CIL in its modified model FSA uploaded on its website in September had retained the same clauses.
The FSA has other discriminatory provisions as well: Private firms will be required to deposit 6% of the base price of coal as security before signing the FSA while PSUs will comply with security condition only after signing the agreement. In this case the commitment provided by the PSUs prior to the issue of LoA shall be converted into security deposit.
The power ministry is concerned about the terms contained in the model FSA as it has the potential to further slow down investment in the power sector and derail capacity addition. In 11th Plan, against a target of 62,000 MW of new capacity, only about 55,000 MW was added.