Coal India Ltd (CIL) will modify the fuel supply pacts before signing them with power companies to incorporate the changes that have been proposed by its board at this week’s meeting, thereby breaking the deadlock over the issue of minimum assured supply of fuel to them.

The Central Electricity Authority (CEA), in a letter, would inform the Power Ministry about the necessary modifications to be made in the Fuel Supply Agreements (FSAs).

Sources said that so far 27 companies have signed the pacts, which will also be tweaked in line with the new changes suggested by the CIL.

At the Board meeting earlier this week, state-owned CIL said that it will sign the FSAs with the power companies for shipping to them a minimum of 80 per cent coal out of the total contracted quantum.

The coal major would meet 65 per cent of the supplies from domestic sources and would import the remaining 15 per cent. It is yet to take a final call on whether the company would pool the price of domestic as well as imported fuel.

The CIL Board’s consensus follows a direction from the Prime Minister’s Office to the company to sign FSAs for the supply of 80 per cent of the contracted quantity, or the trigger level, failing which the supplier would be penalised.

The Planning Commission and the Power Ministry have suggested pooling of the prices of imported and domestic coal to neutralise the impact of higher prices of imports.

The coal major had, in June, lowered its production target for the financial year 2012-13 to 440 million tonnes from the estimate of 452 million tonnes in its annual plan, citing various reasons like heavy rainfall, strike and delays in the grant of environmental clearances to coal projects for the downward revision in the production target.

The public sector company had missed its April-September target by about 20 million tonnes, recording an output of 176 million tonnes, as against the target of 196 million tonne.

Coal India’s production target of 460.5 million tonnes for 2010-11 was revised down to 440.2 million tonnes.

(This article was published on August 3, 2012)
XThese are links to The Hindu Business Line suggested by Outbrain, which may or may not be relevant to the other content on this page. You can read Outbrain's privacy and cookie policy here.