New Delhi: The Power Ministry has requested the Coal Ministry to direct Coal India to sign fuel supply pacts with the generation companies that already have power purchase agreements with discoms.
In a letter to the Coal Ministry, the Power Ministry has asked it to direct Coal India Ltd (CIL) to sign the Fuel Supply Agreements (FSA) with power firms which have entered into long-term power purchase pacts with the discoms (distribution companies), state utilities and other captive users like SAIL, Railways etc.
"Medium-term power purchase agreements entered by the power plant developer with the discoms and the coal release under FSA may be co-terminus (expire at the same time) with the tenure of the PPA (Power Purchase Agreement)," the letter dated June 19 said.
FSA is signed between Coal India (or its subsidiaries) and a power generation company while PPA is signed between the generation company and a distribution company. The letter said that if Coal India has entered into PPA with the generation company for 85 percent of the gross project capacity, CIL may supply the full quantity.
However, if Coal India assures less than 85 percent, then it may release only half of the assured supply as per the FSA. For example, the total requirement of fuel for a thermal power station is one million tonnes and the power company and Coal India sign a PPA for 50 percent of the capacity, then the coal released should be half a million tonne.
If the two parties have signed the PPA based on the delivered capacity, it should be increased by 10 percent to accommodate for transmission losses also. "For testing and commissioning of project, Coal India may supply the desired quantity of coal based on Central Electricity Authority's recommendation irrespective of the PPA signed," the letter added.
Last week, the Prime Minister’s Office (PMO) directed state-run Coal India to provide assured supply of 65 percent for the first three years of the FSAs instead of 80 percent directed by it earlier in April.
It also said that in the fourth year, the supply has to increase to 72 percent followed by 80 percent in the fifth year of the agreements. Coal India has set a production target of 464 million tonnes for 2012-13.


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