Power producers wary of coal pacts, CEA tells PMO | delhi | Hindustan Times
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Power producers wary of coal pacts, CEA tells PMO

delhi Updated: May 07, 2012 22:11 IST

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Power sector planning body CEA has sought PMO intervention on fuel supply agreement as several companies have refused to sign pact with CIL amid differences over penalty to be paid by the coal firm if it fails to supply 80% of the contracted fuel to them.

In a letter to the power ministry, CEA has requested that the matter be taken up with the Prime Minister's Office so that the FSAs (fuel supply agreements) could be signed.

Last month, a Presidential Directive was issued to Coal India Ltd (CIL) forcing it to sign FSAs with power companies at 80% commitment levels or pay penalties.

The Central Electricity Authority's (CEA) request to the ministry comes ahead of its meeting with power firms, which have not signed the FSAs, on Wednesday. "Coal India has placed an entirely different FSA which is detrimental to the interests of the power sector," CEA has said in the letter.

The recently released new FSA, which is being insisted on by coal companies is monopolistic in nature and pro-coal companies, the letter stated.

CEA has also requested the government to re-look some of the clauses of the FSA.

It said, "The rate of compensation for the "Failed Quantity" is 0.01%, which is too little a penalty for non-fulfilment of obligations and that too is applicable after three years."

"It is hardly a disincentive and won't discourage low fuel supplies," it said.