Coal India Ltd.

State run Coal India (CIL) has entered into fuel supply pact with 13 power units to date, comprising Reliance Power’s Rosa Power project. It also includes Lanco Anpara Power and Bajaj Hindustan. However, some have refused to sign fuel supply agreements (FSAs) objecting the penalty clause. Power producer NTPC is among the companies that have refused to sign FSAs.

Last month, the government had issued a directive to CIL to commit a minimum of 80% of fuel supply to power producers, failing of which would attract penalty. The directive was issued following a meeting between the power sector honchos and the Prime Minister's Office.

Further, the state-owned firm is likely to enter into pacts with firms having a capacity of less than 30,000 MW.

The model FSA format includes clauses like suspension of supply of coal to power firms if they were found diverting the dry fuel for any purpose other than the specified end-use plant. It also includes clauses like 80% trigger level and penalty of 0.01% in case of failure to adhere to the agreement.