Coal India Limited (CIL) will sign fuel supply agreements (FSA) with power generation companies that have entered into long term power purchase agreements with distribution companies. The minister of state for coal Pratik Patil said this in a reply to a question asked during the ongoing parliamentary session. This decision has been taken to make adequate coal available to the power plants. CIL subsidiaries are also expected to sign similar agreements.

The move is believed to have followed an intervention from the prime minister’s office to secure fuel for the plants. Pulok Chatterjee, the principal secretary to the prime minister, chaired three meetings to resolve this issue. Chatterjee is believed to have instructed the coal ministry to sign the deals. According to the sources in the coal ministry, PMO mounted pressure on the ministry.

Patil said on Wednesday that captive power plants of different industries are being supplied fuel-grade coal under the applicable fuel supply agreements which are different from that of the proposed FSA for power plants which have power purchase agreements with distribution companies. The applicable FSAs for existing and new captive power plants have a trigger level for penalty for short supply at 60 percent and 50 percent of annual contracted quantity respectively.

The minister further said that the estimated coal production will be adequate to meet the demand of FSA holders. However, in case of any shortfall in fulfilling its commitment under the FSA’s from its own production, CIL may arrange for the necessary coal through imports. It may also source the coal from central and state PSUs that have been allotted coal blocks and have started production of coal but have not commissioned their end use plants.