Business Standard reported that the board of Indian state owned miner Coal India would meet on July 31 to decide on the contentious issue of the format of fuel supply agreements with power companies.

So far, the meeting has been postponed five times.

New FSAs have become a bone of contention, as a lot of power producers, including NTPC, expressed dissent over the new clauses, including the penalty clause of 0.01% of the value of shortfall, if the firm failed to deliver 80% of the committed coal. Following this, the Prime Minister’s Office had, last week, intervened to break the deadlock.

The PMO meeting followed a proposal by CIL to reduce the commitment level to 65% of the annual contracted quantity for the first three years and raise it to 82% in the fifth year. The company had proposed penalty of 10% of the value of the shortfall for supplying coal below 80% of its commitment.

So far, CIL has signed 27 FSAs, and the miner expects the issues to be resolved by the end of this month. Since the total number of firms eligible to sign FSAs rose to 80 till June, more firms are likely to sign.

Source - Business Standard

(www.coalguru.com)