The Coal Ministry has questioned state-owned CIL for considering fuel supply agreements (FSAs) with 11 power developers, worth 5,935 MW capacity, as they are yet to achieve critical milestones related to their projects.

The list includes projects of some big developers like NTPC, Tata Power and Reliance Power, a senior government official told PTI, adding, “Of these 11 developers, Coal India has already signed FSAs or MoUs with 5 firms”.

The official said: “Ministry of Coal, in a recent communique to the CIL, has asked it as to how these 11 projects were considered for FSAs, having pending milestones under the Letter of Assurance (LoA) issued by the coal major.”

The Letter of Assurance (LoA) route, introduced in the New Coal distribution Policy, 2007, provides for assured supply of coal to developers, provided they meet stipulated milestones.

However, this effectively means that the coal companies can consider long term FSAs with only those LoA holders who meet the prescribed milestones.

“The major milestones which have not been achieved by these developers include land acquisition of 100 per cent project area, financial closure of the project, forest and environment clearance and submission of the Commitment Guarantee (CG),” the official said.

According to the list, NTPC’s Dadri Stage-II, Unit-2 of 980 MW in Uttar Pradesh, has not been able to acquire 100 per cent land. Due to this, construction of a water reservoir is pending, though CIL has signed an MoU with the power major to supply fuel.

Similarly, the coal major has executed FSA with Tata Power’s 500 MW Maithan Power project in Jharkhand where land acquisition is still incomplete for the project. According to the government documents, Maithan Power is in possession of only 565 acres out of a total land requirement of 1,166 acres.

Other projects in the list of 11 include, Reliance Power’s Rosa power project, where amendment in environment clearance is required. Coal India has already executed FSA with the developer.

In case of Adhunik Power and Natural Resource’s 540 MW project in Jharkhand, the lease deed for a big portion of land has been found unregistered, while Damodar Valley Corporation’s (DVC) Mejia project’s unit-VII of 500 MW capacity has not submitted loan sanction letter from banks.

Uttar Pradesh Power Corporation Ltd’s 1980 MW project at Bara in Allahabad; Dhariwal Infrastructure’s 300 MW project in Chandrapur; SKS Ispat’s 220 MW project in Chhattisgarh. and Maruti Clean Coal and Power’s 300 MW project in Chhattisgarh also figure in the list, under questioning by the Coal Ministry.

(This article was published on January 20, 2013)
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