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“We are in a position to sign the FSA. The board has cleared. I understand NTPC borad has also cleared it. The contentious issues have finally been resolved,” said CIL’s chairman S Narasing Rao after the company's board meeting here.
“Hopefully, in a week or two, the FSAs will be signed,” Rao added.
The settlement will ensure 80 per cent assured fuel supply by CIL for over 9,300 Mw capacity of NTPC, which has come on stream since March 2009.
This may lead to the signing of FSA with other power producers as well. According to officials, 69 power plants are yet to sign an FSA with state-miner CIL. Out of which, 29 belong to NTPC and its joint-ventures.
Two issues had stalled the signing of the FSA for the units that came up after March 2009. One was calculation of incentives (power producers pay incentive to CIL for more than minimum assured supply) for fuel supply to the power plants that have both kind of units at the same premise -- units built before 2009 and those set up after 2009. Under the 2009 FSA, 90 per cent of fuel supply is guaranteed, while it is 80 per cent in the new FSA.
According to the agreed formula, in such cases, CIL has to meet both the targets separately to claim incentive from the power producer.
The other contentious issue was about quality, because NTPC was not willing to accept and give incentives for coal below the calorific value of 3,100 kilocalorie per kg. The power major has now agreed to accept the same, but with certain riders.
“We will accept coal below the calorific value of 3,100 Kilocalorie per kg. However, NTPC will pay only 25 per cent of the incentive, if CIL supplies over the trigger level for the quantity of coal accepted below 3,100 KCal. The matter is now to be discussed in CIL's board, after which FSAs will be signed. NTPC has commissioned 16 power stations, totalling a capacity of 9,370 Mw since March 2009,” said a senior NTPC executive.
Coal India prepays Japanese loan
The depreciating Rupee appears to have persuaded Coal India (CIL) in prepaying some of its foreign loans.
“We had about Rs 400 to Rs 500 crore Japanese loan. We have prepaid it,” CIL CMD Narasing Rao said.
The stae-owned miner, however, has another Rs 400 crore loan from World Bank. “Currently there is no provison for prepayment of World Bank loan,” Rao added.
However, Rupee depreciation is unlikely to stress CIL's profit as the company has only limited exposure to the exchange rate risk. The miner currently has the World Bank loan as the only foreign currency loan on its books.
“Increase in cost of import due to anticipated Rupee depreciation is less than Rs 50 crore, which is less than 0.10 per cent of the total expenditure of the company,” Abhijit Chatterjee, Director (Finance), Coal India said.
