FSA with NTPC: No directive, only views sought, says Coal India

Pratim Ranjan Bose Kolkata | Updated on March 12, 2018 Published on May 23, 2012

Has the Coal Ministry asked Coal India Ltd (CIL) to disregard its board decision and enter into a fuel supply pact on NTPC's terms? While the CIL Chairman, Mr Narsing Rao, declined to comment on the issue, company insiders not only deny any such directive but also wonder if the Ministry can override board decisions.

Though they do not rule out the possibility of government directives to resolve the imbroglio over FSAs, sources say that the company had only got a communication from the Ministry seeking its view.

“It is not a directive,” a source said, adding that the board decision is binding on the company, unless vetoed by the government, as was done through a Presidential Order in April. As per the April order, the CIL board agreed to sign FSAs for power plants commissioned between April 2009 and December 2011 but on terms and conditions that are distinctly different from the FSAs signed till March 2009.

One clause changed

The NTPC chairman and managing director, Mr Arup Roy Choudhury, has said that the Coal Ministry had “directed” CIL to sign FSAs with NTPC on 2009 terms. He was quoted as saying: “We will change only one clause that is the trigger for incentive and penalty. They (CIL) have agreed. The Coal Ministry has directed them to sign it. It will happen any time soon.” CIL insiders admit that top officials of the two companies exchanged notes at a recent meeting in Kolkata. It has also been confirmed that CIL is actively working to end the deadlock at the earliest.

The sources, however, deny any commitment being made to NTPC. “Considering the production shortfall, which was largely attributed to reasons beyond our control, the board has taken a decision in the best interest of the company and its shareholders. How can we go against such decisions,” a source asked. CIL sources blame the NTPC for what they term an inordinate delay to develop the one billion tonne Pakri Barwari reserve in Jharkhand for some of CIL's problems.

Awarded to NTPC nearly a decade back as an umbrella captive source to meet shortfall in a number of projects, Pakri Barwari is estimated to produce 25 million tonnes of coal a year. The power producer has finalised the contract with the mine developer and operator.

“Just as we are not blaming them for the delay in developing this huge captive reserve and putting pressure on commercial production, they should also be considerate to our cause,” a CIL source said.

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Published on May 23, 2012
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