The row between Coal India and the power companies on signing fuel supply agreements (FSAs) seems never-ending.
Once again, the Power Ministry wants changes in the latest (September 26) FSA readied by Coal India.
Power Secretary P. Uma Shankar in a recent communication to his counterpart in Coal Ministry S.K. Srivastava has flagged 10 issues that need to be modified in the FSAs.
According to Uma Shankar, the new FSA still contains a few clauses, which are against the interests of power developers.
He wants Srivastava to instruct Coal India to resolve the concerns of power producers and change the supply pact.
The issues raised by the Power Secretary include annual contracted quantity, end use of coal, source of supply, schedules, collection of samples, termination of contract and force majeure .
Coal India has mentioned in the FSA that if there are any changes in the distribution system, it will discuss with the buyer. And if both parties do not arrive at an agreement within 30 days, the miner can terminate the deal.
The Power Ministry has strongly opposed the clause and said any termination of contract should be approved by the Government.
Coal India also said that it will terminate the pact if the power producers cannot renew their power purchase agreement with a State electricity distribution utility within six months of its expiry. The Power Ministry wants this clause to be deleted.
In case of imported coal, the miner has said that under ‘no-circumstances’ a power producer can refuse imported coal. The Power Ministry wants the buyer to have the right to refuse to imported coal if quality is not satisfactory and the price offered does not conform to the agreed formula based on international benchmark price.
The miner has also offered a buyer to pick up coal from pit-head or stock heads provided the buyer makes the transportation arrangement. However, the contentious issue is that a purchaser may not have an evacuation arrangement.
Private power producers have already criticised Coal India of drafting ‘one-sided’ FSAs favouring Government companies.