NTPC Ltd.

Burying the old hatchet, Power utility NTPC agreed to sign the fuel supply agreement (FSA) with Coal India (CIL) for 9,370 megawatt capacity plants that have come into operation after March 2009 but with certain riders. The two PSU giants managed to ink FSA after arriving at an understanding on coal quality. While, NTPC agreed to accept inferior quality coal (less than 3,100 kilo calories per kg) subject to limiting its incentives under the agreement, Coal India, on its part, assured independent quality checks at point of loading of coal, which would start by September 30.

According to the FSA guidelines, if CIL supplies more than the minimum assured quantity of 80 per cent (65 per cent domestic and 15 per cent import) to its client, the miner is provided with incentives on the additional supply.  However, as per the revised FSA, NTPC would incentivize only 25 per cent of the proportionate quantity.

Earlier, NTPC resisted from signing FSA as it felt that the world's largest coal producer, Coal India, was supplying 'rocks and boulders' just to meet its supply commitment. It also had concerns with respect to maintaining two sets of FSAs for thermal power stations which have units built before 2009 and those that came up subsequently.

Nevertheless, NTPC’s board agreed to end the spat after CIL decided to put in place systems for third-party sampling and analysis at the loading end before September 30, 2013. Post this, Auto Mechanical Samplers wherever installed and not operational shall be made operational in a time-bound manner.