The power generation companies belonging to 14 state electricity boards (SEBs) have not yet signed fuel supply agreements (FSAs) with the state-run miner Coal India Ltd to have firm supply of the fossil to keep their plants running.

Jawahar Lal Goel, chief general manager (marketing), Coal India, said so far only four states have signed fuel supply agreements with Coal India - Karnataka, Andhra Pradesh, Orissa and Gujarat. "The drafts of the agreements are ready and those would be signed any time now," he said.

Earlier, mid-January, Union minister of state for coal Santosh Bagrodia had said the state-run power generation companies would sign up fuel supply agreements with Coal India in about a week to get assured supply of the quantity of coal mentioned in the contract.

The power producers had been asking for a trigger level of 90% fuel supply, implying that Coal India needs to pay a penalty in case it supplies less than 90% of the quantity of fuel agreed upon.

The state-run coal producer, however, had signed earlier FSAs with the four SEBs at a trigger level of 60%.

Goel said the new FSAs would now be signed at a trigger of 90%, adding, if the production capacity doesn't rise significantly in the years to come, then the miner would be forced to sign further agreements at a much lower trigger level.

Under the FSA, Coal India will have an obligation to guarantee supply of the amount of fuel agreed upon with the customer - usually the power generation companies, cement makers and steel producers.

It will meet the obligation of assured supply through importing coal, in case its in-house production is short of the quantity to be supplied.
Shaleen Agrawal DNA-Daily News & Analysis Source: 3D Syndication