APP makes case for tripartite fuel supply pact among electricity generating companies, coal firms, railways

The Association of Power Producers (APP) on Friday made a case for a tripartite fuel supply agreement among electricity generating firms, coal companies and railways to fix responsibility amid the ongoing dry fuel shortage at thermal power plants.

The suggestion was given by a delegation of APP to Union Power Minister R K Singh in a meeting on Friday.

Singh met a delegation of the Association of Power Producers (APP) on Friday to hear their concerns and suggestions on the current issues, APP said in a statement.

APP suggested the “Ministry of Power may push for a tripartite fuel supply agreement to be signed between the generators, coal companies and railways, in order to clearly delineate responsibilities and obligations of each party and put in place an equitable penalty mechanism for all stakeholders to ensure balanced distribution of risks”.

The Association also said the Union minister was in an agreement point made by APP and asked it to send in a memorandum, so that the power ministry could also write to the states and other stakeholders.

It also asked the minister to ensure adequate liquidity for the generators by way of timely payments by the power distribution companies (discoms).

“With regard to the payment liquidity issues, he (the minister) urged the IPPs (independent power producers) to sit with the CPSU (central public sector undertaking) generators and come to a common agreement to start regulation of power to the defaulting States, in order to avoid the current practice of selective payments being made to certain generators,” the APP stated.

The APP has also suggested providing a remedy for the current disbalanced contractual provisions for coal procurement. Under this, the generators have a stringent and unavoidable obligation of always making full payment in advance for the coal, while the coal companies and Railways have much lighter or even nil obligation to ensure that the desired quantity and quality of coal reaches the generators.

During the meeting, the APP members welcomed the changes being proposed by the power ministry to strengthen the coal stocking norms.