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Putting a formal end to the year-long dispute over coal supply agreement, Coal India (CIL) and NTPC today finally completed signing of fuel supply agreements (FSA) ensuring 60 million tonne of annual coal supply to 14,010 Mw capacity.
"We have worked hard for this day. Whatever the differences were, it has been soreted," NTPC chairman Arup Roychowdhury during the brief media interaction following a well-organised photo-op with bosses of both the PSUs.
According to, CIL chairman S Narasing Rao 28 of the 29 FSAs have already been signed now. Of these 17 are with NTPC plants and 11 with different joint-ventures of NTPC. The FSAs will ensure 80% assured fuel supply by CIL to all these plant with !4,010 Mw capacity, that has come on stream since March 2009.
One FSA, that is for 500 MW power plant of NTPC-SAIL JV, is yet to be signed. "There is some operational issue there, which we will soon be resolved," Rao said.
This may lead to signing of FSA with other power producers, as Roychowdhury pointed out, "With this FSA, CIL will have a standard signing format."
There were two major issues that had stalled signing of the FSA for units and in April last year government had issued a Presidential directive to Coal India to sign fuel supply agreements (FSAs) with the power producers assuring them of at least 80% of the committed coal delivery.
One contention was over calculation of incentive (power producers pay incentive to CIL for more tnan minimum assured supply) for fuel supply to the power plants that have both kind of units at the same premise -- unit built before 2009 and units set up after 2009. It should be noted that 2009 FSAs guarantee 90% assured fuel supply as against 80% in the new FSAs. According to the agreed fomula in such cases, CIL has to meet both the target separately to claim incentive from the power producer.
Another contentious issue was about quality, as NTPC was not willing to accept and give incentives for coal below the calorific value of 3,100 Kilocalorie per Kilogram. The power major has now agreed to accept the same, but with certain riders. NTPC will pay only 25% of the incentive, if CIL supplies over the trigger level, for the quantity of coal accepted below 3,100 Kcal.
Also, both the PSUs have agreed for third-party sampling at the loading level, which may start in coming October onwards.
Timeline
April, 2012: Government issues a Presidential directive to Coal India to sign fuel supply agreements (FSAs) with the power producers assuring them of at least 80% of the committed coal delivery
July 6, 2012: PMO held meeting to resolve the issues impeding FSAs
July 31, 2012: A model FSA was presented by CIL board
November, 2012: Following NTPC's objection, Power Ministry writes to Coal Ministry. Seeks few changes in FSA,including provison for joint sampling of coal
December, 2012: Coal Minister Sriprakash Jaiswal and Power Minister Jyotiraditya Scindia to discuss differences
March, 2013: NTPC raises concern over quality issues
April, 2013: CIL and NTPC engages in public spat after CIL stops supply in some of the NTPC units for non-payment of dues. NTPC refuses to pay for "poor quality coal". Supply resumed after two days
June 25: NTPC board approves a mutually agreed terms and conditions for FSA
June 26: CIL board approves the same
July 17: CIL completes signing of 28 of 29 FSA with NTPC and its JVs
