Coal India board to meet on 7 August to decide on FSA

The Coal India (CIL) board is scheduled to meet on 7 August to finalise new fuel supply agreement (FSA) to be made with the power firms.

“The Coal India Board will now meet on 7 August to discuss and finalise the new FSA. The penalty issue, which remained inconclusive in 31 July meeting will also be discussed and accordingly new FSA will be made,” an official privy to the information said.

[caption id=“attachment_403084” align=“alignleft” width=“380”]  Reuters[/caption]

Meanwhile, the state-run company has also shifted the venue of the meeting to Delhi from earlier scheduled Kolkata. “The 286th meeting of Board of Directors of CIL which was scheduled to be held on August 7 in Kolkata will now be held in New Delhi,” CIL has said in a communication to heads of its various subsidiaries.

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The development comes in the wake of power firms including NTPC refusing to enter into pacts with CIL dismissing its FSA over low penalty clause for the coal major in case of its not meeting the committed supply.

CIL board on 31 July reached a consensus on supplying a minimum of 80 percent of the contracted quantity of the fuel to power firms, meeting 15 percent through imports. As a result, the state run firm will import around 20 million tonnes of coal this year.

However, the board could not reach a consensus on penalty clause and once it is finalised accordingly a new FSA will be framed, the official said. The Prime Minister’s Office, last month, directed the Coal giant to sign the pacts with power firms for supply of 65-80 per cent of the contracted quantity, amid delays in signing of the agreements.

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CIL had also been asked to look into the possibility of supplying 75-80 percent of the assured quantity of coal in the second year under a relaxed penalty clause. “In the third, fourth and fifth year, it could be 80 percent with strict penalty,” it was suggested.

However, citing introduction of new clauses in the pact, NTPC and many power companies had declined to sign FSAs with CIL. So far, only 27 power plants including that of Lanco, Reliance and Adani, out of 48, have signed FSAs with the state-run coal giant.

The government had in April issued a directive to CIL to commit a minimum 80 percent of fuel supply to power producers, failing which it would attract penalty.

PTI