The Prime Minister’s Office on Wednesday directed the power and coal ministries to complete the process of signing fuel supply agreements (FSAs) with power developers by November 15.
As per an earlier directive, Coal India Limited (CIL) has to sign about 80 FSAs with power producers for projects getting commissioned up to March 2015.
CIL has already signed 29 FSAs so far, but will have to get all the producers on board for the agreement as even the older version of the contract needs to be tweaked a bit.
?We are ready with our plan to complete signing of FSAs by mid-November,? S Narsing Rao said. The coal ministry has agreed to drop its insistence on submission of power purchase agreements (PPAs) by power project developers as a pre-condition for signing FSA.
Now, it has been agreed that CIL will not insist on PPA for signing FSA. But developers will have to submit PPA before taking delivery of coal. The quantity of coal supplied to power producers would be proportionate to the amount of power contracted under PPAs.
This mechanism was agreed given the developers’ complaints that bankers were hesitant about signing loan agreement with them in the absence of FSA.
Some 50 FSAs are yet to be signed while 29 FSAs already signed need to be reconfigured to accommodate the new changes agreed between the ministries of power and coal in FSA clauses. It is expected that under the terms of the new agreement, CIL would meet 80% of coal requirement of companies but would supply 15% of it through coal imports. Imported coal would be supplied on a cost plus pricing and only after advance payment is made by companies.
The issue of pooling coal pricing was also discussed in the meeting held by Pulok Chatterjee, principal secretary to the PM, on Wednesday with senior officials of the two ministries, sources said. However, power ministry has been asked to bring more clarity on the issue before decision on the matter could be taken.