Date:30/03/2007 URL: http://www.thehindu.com/2007/03/30/stories/2007033001702000.htm

Business

CIL to enter into first-ever fuel pact with NTPC

Indrani Dutta

KOLKATA: Coal India Ltd (CIL) is all set to enter into a first-ever fuel supply agreement (FSA) with power major National Thermal Power Corporation (NTPC) with penalty clauses for non-delivery of coal and failure to lift coal by the utility. The proposed 20-year pact involves supply of at least 100 million tonnes of coal annually.

The broad contours of the deal were worked out at a meeting between the chairmen of the two public sectors on Wednesday and would now be sent to the Union Power and Coal ministries after getting cleared by the respective boards.

NTPC, which needs about 110 million tonnes of coal annually, buys 100 million tonnes from CIL.

Model for all subsidiaries

The proposed FSA is the first instance of CIL getting involved in the entire process, stepping beyond its role as a policy-making body. This contract will become a model for all subsidiaries.

The main aim of this initiative is to check build-up in coal stocks which now stand at 43 million tonnes in March against 33 million tonnes in the same period in 2006.

At present, coal supply comes through the allocations made by the Standing Linkage Committee. The inter-ministerial SLC grants linkages to utilities based on the recommendation of the Central Electricity Authority. Additionally the seven coal-producing subsidiaries of CIL sign agreements with the NTPC for supplying coal and there have also been instances of a coal project being developed to feed a particular power plant.