NTPC, CIL call truce; to sign Fuel Supply Agreement soon

NTPC, CIL call truce; to sign Fuel Supply Agreement soon


New Delhi: Ending months old tussle, NTPC and CIL have agreed over supply of coal after an intervention by the Central Electricity Authority.

As part of the pact, CIL would supply 90 per cent of the domestic coal requirement of NTPC and the specific Fuel Supply Agreement in this regard would be signed by the two PSUs in January next year, Minister of State for Power Jairam Ramesh said here.

As per the agreement, Coal India Ltd would supply coal to NTPC’s new power plants enabling them to operate at 90 per cent Plant Load Factor (PLF) else the power producer could trigger the penalty clause against CIL.

“Central Electricity Authority (CEA) has suggested a compromise that the new power projects of the companies will get an assured supply of coal to operate the plant at 90 per cent Plant Load Factor (PLF)," Ramesh said, adding that the first round of FSA between CIL and NTPC will start from January 1, 2009.

Once NTPC and CIL enter into a FSA, other state utilities would also follow to have similar agreements, the minister said asserting that this would resolve the shortage of coal to a large extent.

Power Ministry is importing 20 million tonnes of coal in this financial year, NTPC is importing eight million tonnes and CIL for the first time is importing four million tonnes of coal. But the long term reliance on coal import is not likely to provide solution to the problem of fuel shortage.

“To think imported coal is the solution to fuel shortage problem is unrealistic as equipment at most of the power plants are not designed to use the blend of imported and domestic coal," the minister said.