Coal India seeks to buy more time for signing FSAs

Written by fe Bureau | New Delhi | Updated: Mar 31 2012, 09:22am hrs
Coal India (CIL) has decided to seek more time from the government to sign fuel supply agreements with power companies to meet up to 80% of their total needs. We will miss tomorrows (Friday) deadline to sign fuel supply agreements with power producers, CILs acting chairman Zohra Chatterji said.

According to senior company officials, the proposal is under consideration and deliberation of the board, which would require more time to reach a consensus before going ahead with these agreements.

The PMO in February had asked CIL to enter into FSAs with power companies with an assurance to meet 80% of the coal requirement of these companies. The directive came with a condition that there would be a penalty if the coal major was not able to supply 80%, and an incentive if it met 90% and more of its supply commitment.

A company official said that this condition was the main bone of contention with the board members. Some members have do not agree with these clauses. They also have issues related to the interests of minority shareholders.

Even as a decision in this regard remains deferred at the moment, the government officials maintain that it would be signed soon.

The coal ministry has already made it clear to the company that it must follow the PMOs directive. The government has made its stance very clear (even though) the decision on 80% trigger is deferred, a coal ministry official said.