CIL expects model FSAs to be in place by March

Written by Corporate Bureau | Kolkata, Dec 28 | Updated: Dec 29 2007, 06:49am hrs
Coal India Ltd expects all fuel supply agreements (FSAs) to be in place by the end of March as it moves to the new marketing system based on commercially enforceable contracts and scraps the linkages regime, marketing director K Ranganath said Friday.

"We are working out model FSAs for different classes of consumers, and these will be ready within a month," he said.

He said consumers complain that coal is not available, but CIL's stocks have gone up by 2 million tonne in this month alone.

The new policy has done away with the distinction between core and non-core sectors. Now, the power and fertilizers form one sector and will be assured 100% of their requirement. The next is defence and railways, whose requirements are minuscule.

Others also will get their coal, but only 75% of their normative quantity, at the notified price. "For the balance, they have to go for e-auctions or imports, or captive blocks," he said.

The associated mechanisms are being put into place in stages. Addressing the Coal Consumers Association of India, he said consuming industries should have their normative quantities decided, based on categories. At present, only the power sector has such benchmarks.

"If the norms are not there by then, CIL will tap independent agencies, and fix the normative requirements," he said.

By February, CIL will also have in place the forward e-auction system, which only genuine consumers-- with or without linkages --- will be able to use to book ahead for the full year.

CIL also expects to select by March end the importing agencies through which it plans to bridge shortfalls faced by particular customers who have contracts with it, Ranganath said.

Meanwhile, the railway ministry is considering the draft of a fuel supply transport agreement drawn up by coal and power ministries, and once the three parties agree, the coal producer and consumers across the spectrum will gain fully from the compensation system.

This is the only element that will take time, may be up to two years, since three ministries are involved.