NTPC Ltd is expected to enter the fuel supply pact with Coal India (CIL), for approximately 9,000 MW capacity added since April 2009, in the next two weeks.

The board of directors of CIL on Wednesday approved the terms of settlement between the two companies. The NTPC board has approved a proposal in this regard on Tuesday.

“They (NTPC) should start supplying fuel supply agreements in the next two weeks,” CIL Chairman S. Narsing Rao told Business Line . The development is confirmed by NTPC.

The public sector power major raised a number of issues regarding coal quality and quantity as a precondition to enter the fuel supply agreement and is currently catered through a memorandum of understanding.

In a report on June 18, Business Line had reported that both the parties are expected to resolve the differences this month.

Settlement formula

According to CIL sources, keeping in tune with NTPC’s demand, the coal major will strive to supply fuel having heat value of 3100 kilo calorie per kg (G-14) or more. The coal miner will get lower incentives if it fails to meet the quality parameters. Incentives are offered for supplying more than the guaranteed quantities.

According to NTPC Chairman Arup Roy Chowdhury, only one-fourth of CIL supplies below the prescribed heat value will be considered for incentives.

Shares of NTPC were up by 2.95 per cent to Rs 141.20 at BSE on Wednesday.

PTI adds

Coal India will prepay Rs 300-400 crore outstanding Japanese loan as the rupee crashed to above Rs 60 against the US dollar.

“We have decided to prepay Japanese loan and the outstanding amount will be about Rs 300—400 crore due to forex situation,” Coal India Chairman S. Narsing Rao told PTI.

Asked about the World Bank loan, Rao said there is no provision for prepayment; otherwise the company would have done the same.

The outstanding loan from the World Bank would be around Rs 400-450 crore.

These loans were extended for development and modernisation of Coal India in the past.

CIL officials said the outstanding loan, which the company has decided to clear, was from the Japanese Exim Bank.

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