Power ministry seeks PMO help to resolve FSA impasse | business | Hindustan Times
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Power ministry seeks PMO help to resolve FSA impasse

business Updated: May 13, 2012 15:38 IST
New Delhi

With uncertainty continuing over coal supplies, the power ministry has sought the intervention of the Prime Minister's Office (PMO) to resolve the issues related to CIL's new fuel supply agreement, sources said.

Most of the power producers have reservations about certain clauses, including those related to penalty, in the revised Fuel Supply Agreement (FSA) put forward by Coal India (CIL).

Against this backdrop, power minister Sushilkumar Shinde has written to the PMO seeking intervention on the issue, sources said.

Shinde's communication came after the Central Electricity Authority (CEA) held discussions with various power generators on May 9 to gather their views on the FSA problem.

According to sources, the power minister has requested the PMO to instruct the coal ministry and CIL to sign FSAs within a month based on the 2009 format.

In April, the government had issued a directive asking CIL to ink FSAs with an assurance for minimum 80% fuel supply to power plants.

However, power producers have said various conditions in the new FSA such as on penalty and bringing ordinary business difficulties under force majeure are not acceptable.

Another concern is that for new units at the same plant, the developer has to ink the revised FSA while coal supply would be based on earlier pact for old units.

Meanwhile, the coal ministry has issued a directive to coal companies to supply fuel to power plants commissioned till March 31, 2012 as well as those to be commissioned during 2012-13 through the Memorandum of Understanding (MoU) route till the FSA issues are resolved.

An MoU is not a legally binding document.