The Hindu Business Line : Coal India may start signing fuel supply pacts next month

Kolkata. Feb 18 In tune with the new coal distribution policy, Coal India may enter into fuel supply agreements (FSAs) with consumers beginning March this year.

According to Mr. K Ranganath, Director-Marketing, the model FSAs were now in the final stages of preparation and expected to be launched for signing in March. The company had previously appointed CRISIL for preparing the model agreements.

Asked whether the signing will be over this fiscal as prescribed by the Union coal ministry, he said that as on date CIL was confident of meeting the targeted time schedule.

The supply agreements - applicable to all kinds of coal users - will do away with the linkage system and introduce a firm ‘take-or-pay’ system whereby customers will have to pay for non-lifting of the allocated quantities. Similarly, CIL too will be equally responsible for supply of agreed quality of coal.

“We have already identified the mines and indexed the grades to be supplied by them. Model agreements for sectors other than power are ready. While a draft agreement is finalised with NTPC, those for other power producers including the State and Central utilities are nearing finalisation. We are hopeful of wrapping up the process of finalisation of draft FSAs by end February and enter into the signing phase in March,” Mr. Ranganath clarified.

It may be mentioned that as per the distribution policy, all consumers except those in the small and medium sector (SME) consuming up to 4200 tonnes a year, will have to enter into separate FSAs. Supplies to SMEs will be made through a state nominated agency and the latter will have to enter into a supply pact with CIL.

Power (including captive power) and fertiliser are eligible to get normative supplies for the entire quantity required. Other consumers will get 75 per cent normative supply. All the existing linkages – which do not make it mandatory for the customer to lift the quantity offered - will be replaced by firm allocations and the corresponding FSAs.

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