Coal India asked to sign FSAs before finalising power purchase agreements

The Coal Ministry has asked Coal India (CIL) to sign fuel supply pacts with the power generation companies before finalising power purchase agreements with them.

"The Coal Ministry has directed Coal India Ltd (CIL) to sign Fuel Supply Agreement (FSA) with power companies, including NTPC, without waiting for PPAs (power purchase agreements)," a source close to the development said.

In December last year, the Prime Minister's Office had directed power producers to sign fuel supply agreements (FSAs) with CIL in a month's time. So far, 60 power companies have signed FSAs while many have not signed citing varied reasons.

India's largest power producer National Thermal Power Corporation (NTPC) has refused to sign FSA, saying CIL was supplying poor quality coal.

NTPC Chairman and Managing Director Arup Roy Choudhury had said it had agreed on almost all terms and conditions of the FSA and is ready to sign the agreements provided CIL promised to give a minimum calorific value coal.

"NTPC power plants need coal of minimum 3,100 kilocalories, but CIL at times had supplied coal with average heat generating capacity of about 2,100 kilocalories," according to the power company.

NTPC buys close to 140 million tonnes of coal to fire its thermal power plants. The company has not signed FSAs for 4,500 MW power generation capacity.

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