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NTPC goes back on demands, to sign fuel supply pacts with CIL

Source : BUSINESS_STANDARD
Last Updated: Tue, Dec 11, 2012 03:39 hrs
Labourers work inside a coal yard on the outskirts of Ahmedabad

State-run NTPC has decided to sign fuel supply agreements (FSAs) with Coal India in a month, without any major change in the norms of draft FSAs.

Both firms decided to bury differences at a meeting in Kolkata on Monday between the chiefs of the public sector undertakings, S Narsing Rao of CIL and Arup Roy Choudhury of NTPC.



"Both parties have discussed various issues. Many of the problems can be thrashed out and the FSAs can be signed in a month," Roychoudhury said. Rao said the Kolkata-based coal major will not go for a change in the revised draft FSAs, cleared by its board in September. In January, a meeting will be held in this regard to sign FSAs.
Both companies have assigned a team of officials to come out with a final report on the decisions taken between both the companies and file it by Tuesday. "Today's decision will be presented before the respective boards of CIL and NTPC for clearance," the NTPC chairman added.

While the board meeting of the Kolkata-based coal major is slated for December 12, NTPC board is set to meet on December 26. NTPC is looking for supplies of about 4,500 Mw of power under the new FSAs up to 2012.

However, today's developments indicate that NTPC has to go back on its various demands. "CIL has said that they cannot consider NTPC demands like signing two sets of FSA terms for plants in brownfield expansion, penalty clauses or any change in draft norms for one company. Today, some discussions happened regarding quality of coal, including the upper limit of stone and all. CIL has agreed to compromise on these issues," an official said on conditions of anonymity.

Sources however confirmed that there would be some sort of reimbursement if the upper limit for stone content in coal is higher that the quantity allowed. NTPC was also against the shifting of CIL to gross calorific value-based pricing, which was also discussed in the meeting.

As of now, only 33 firms have signed FSAs, even after a deadline of November 30 set by the Prime Minister's Office to power companies. A total of 120 power plants set up between July 2009- March 2015 are expected to sign FSAs with the coal major - this includes 49 units set up between July 2009-December 2011 and another 81 more units set to come up between January 2012 and March 2015.

The Prime Minister's Office had asked the power companies to sign FSAs, even if they do not have a binding pact for sale of power. "This will have no impact on the bottomline of CIL. An impact will be there only if price pooling happens, which is under the consideration of the government," an NTPC official said.

CIL had revised its FSA norms following protests by power firms including NTPC, revising penalty slabs, doing away with moratorium. The board has also cleared a cost price model for signing of FSAs, which will provide imported coal at actual cost. CIL had also agreed for a penalty ranging from 1.5 per cent to 40 per cent on failure to meet supply commitments.

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