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Coal India to decide on fuel supply agreements on Wednesday

Independent directors of the company are resenting a clause in the agreement for ensuring at least 80 per cent supply of the commitment to the power plants.

BT Online Bureau   New Delhi     Last Updated: March 30, 2012  | 22:51 IST

Coal India (CIL) board will meet on Wednesday to get a draft approved on fuel supply agreements (FSA). The meeting will be held amid opposition from independent directors about a proposal to sign fuel pacts with power producers for a minimum 80 per cent supply of the commitment.

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"The CIL Board will meet and we are hopeful that the draft (Fuel Supply Agreement), which could not get the consent of independent directors would be signed," a top official in the Coal Ministry said.

The CIL board meeting held on March 22 had remained inconclusive in the wake of its independent directors resenting a clause in the FSA for ensuring at least 80 per cent supply of the commitment to the power plants.

The independent directors are opposed to the clause because the PSU is already facing problems in enhancing coal production and was not in a position to meet the commitment.

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The development comes in the wake of Prime Minister's Office (PMO) last month directing CIL to ink FSAs with 80 per cent supply clause before March-end for power plants that have been commissioned on or before December 31, 2011.

Amid power plants facing a supply crunch, the PMO had said that FSAs would be signed for full quantity of coal mentioned in the Letters of Assurance (LoAs)for a period of 20 years.

It had elaborated that if the supply remains below 80 per cent, then CIL would be penalised and would be provided incentives if it was found above 90 per cent.

In case, CIL is unable to meet the obligations, the company would have to arrange for fuel through imports or other arrangements, it had said.

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