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CIL decides on FSA date and penalty

Coal India Ltd (CIL) has finally decided on the penalty and the date for conclusion of fuel supply agreement (FSA),which Prime Minister Manmohan Singh has been stressing for long.

Written by Fe Bureau | Kolkata | Published: April 17, 2012 9:19:57 am

Coal India Ltd (CIL) has finally decided on the penalty and the date for conclusion of fuel supply agreement (FSA),which Prime Minister Manmohan Singh has been stressing for long.

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After nearly a seven hour long board meeting,CIL chairman Zohra Chatterji said all FSAs would be signed before April 20 and penalty has been fixed at 0.01% of the value of short supply.

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The government has fixed the trigger level at 80% for supplies of coal to the new power plants and failing to meet the trigger level would attract a penalty.

Chatterji said CIL has agreed to the penalty clause kept in the FSA document. But “we have decided to keep it at minimum,” Chatterji said adding that the penalty clause would be effective after three years.

Earlier the penalty was 10% of the value off short supplies,but the government in the new FSA document left it to CIL to fix the penalty amount.

However,80% trigger level for supplying coal to the new plants was very high,Narsing Rao,chairman designate earlier told Fe. So if CIL has to agree to the trigger level,it has to keep the penalty low,an official said.

The trigger level for supplies to the existing power plant is already at 90 %. So meeting 80% trigger level at the current level of production was not feasible. CIL has taken three years time to make the penalty clause effective with a view that in another three years CIL’s production should cross the 520 million tonne mark.

CIL was supposed to produce 520 mt in 2011-2012,the terminal year of the 11th plan period but it ended the year producing 435 mt.

Though the government has been insisting CIL on importing coal and supply to the power utilities,Chatterji said nothing on imports has been decided on Monday’s board meeting.

“Our main agenda of today’s meeting is to implement the government directive and the board has been deliberating on just the FSA document to be signed. All FSAs would be signed before 20th of this month,” Chatterji said.

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