CIL modifies fuel supply agreement model for new power plants

Tags: CIL, Fuel, Power
State-owned Coal India has tweaked the fuel supply pact model for new private power plants providing them an opportunity to amend/supplement the power purchase agreement (PPA) more than once a year.

PPA is a contract between two parties, one who generates electricity (the seller) and one who is looking to purchase electricity (the buyer).

"Under the provision of Annual Contracted quantity (ACQ), it was provided that whenever there is any change in percentage of (long term) PPA (s), corresponding change in ACQ shall be effected through a side agreement.

"However, such change is permissible once in a year and becomes effective only from the beginning of next quarter," Coal India said in a recent recent letter to its subsidiaries.

"Considering that the above stipulation is coming in the way of power plants to revise the ACQ more than once in a year even though they were able to procure additional long term PPAs during the same year, the relevant provision has been considered to be modified to provide scope to such power station to amend/supplement the PPA once in a quarter," it said.

Amid continuous delays, CIL has so far signed 160 fuel supply agreements (FSA) with power units.

The Cabinet Committee on Investment ( CCI) had earlier stated that the timelines for signing of fuel supply pacts for power projects of 78,000 MW capacity should be met.

"As of now Coal India has signed 160 fuel supply agreements (FSAs). There are still some more to be signed," a Coal India official said.

Power projects with 78,000 MW capacity have been approved for coal supplies by the Cabinet Committee on Economic Affairs (CCEA). For these projects FSAs would be signed for 172 units covering 134 Letter of Assurances (LoAs).

"(Overall) 177 LoAs (Letter of Assurances) were issued by CIL and its subsidiaries for power projects to be commissioned during the 11th and the 12th Five year Plan. These LoAs cover a capacity of about 1,08,000 MW," according to a Coal Ministry document.

Two deadlines set for the signing of FSAs by CIL with the power producers could not be adhered to. The Coal Ministry had set the deadline of August 31, 2013 for signing of the FSAs, which could not be met. The second deadline was set for September, last year.

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