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Coal India to sign 7-8 more FSAs with NTPC tomorrow: Narsing Rao

NEW DELHI: State-run Coal India will tomorrow enter into 7-8 more fuel supply pacts with power major NTPCBSE 1.12 % for 4,000 MW generation capacity, a top officialsaid today. 

The development follows after the logjam on the issue ended last week when NTPC signed fuel supply agreements (FSAs) with
Coal India LtdBSE -1.38 % (CIL) for 500 MW Kahelgaon unit in Bihar and 500 MW Farraka unit in West Bengal. 

"NTPC is signing FSAs with us tomorrow. FSAs would be seven or eight for about 4,000 MW out of 10,000 MW. We have already signed two for Farraka and Kahelgaon," CIL 
Chairman and Managing Director S Narsing Rao told reporters here. 

Rao said the dispute with NTPC over quality of fuel supply by CIL was "a kind of sorted out" and "hopefully things would get resolved". 

"There is an understanding between NTPC and us that how do we solve this third party evaluation extrapolating into the period from when they reduced the payment affected from October last year," Rao said. 

He added there would be a third party sampling of coal to ascertain its quality at the loading end. 

Replying to another query, he said total coal linkage for NTPC for new generation power plants is about 28 million tonnes. 

NTPC had refused to enter into FSAs with CIL over quality issues of the dry-fuel supplied to it and had stopped payment to Coal India subsidiary, 
Eastern Coalfields Ltd. 

Retorting to the step, the world's largest 
coal miner had temporarily stopped supply of fuel to NTPC which was resolved later following government's intervention. 

Rao said NTPC owed "close to Rs 4,000 crore to Coal India" and NTPC has started paying back the money. 

Last week, NTPC signed two FSAs with Coal India for supply of 2.31 million tonnes (MT) of coal from its arm Eastern Coalfields. 

A total of 17 FSAs are to be signed by NTPC for a total generation capacity of about 10,000 MW, Rao said. 

There were two major issues which led to the delay of over one year before a compromise was arrived at by CIL and NTPC on FSA. One issue was how to treat the pre-2009 
FSA with the 2012 FSA. 

It was resolved after both agreed that the supplies received at both the stations would be met and thereafter the surplus would be considered for incentive. 

Another issue was how to deal with coal which was below 3100 kilo calories per kg. 

NTPC was not willing to accept below 3100 kilo calories, but its board finally agreed to pay as per the new grading and that for incentive only 25 per cent of the quantity supplied below 3100 kilo calories would be considered.