Coal India tweaks FSA,power cos refuse to sign deal

With these clauses clearly tilting the balance of the pact in favour of the coal major,power developers have refused to sign the FSAs. Of the 48 FSAs that were to be signed — for power plants that were commissioned till December 2011 — less than a dozen have been inked until now.

“When flimsy reasons such as breakdown of equipment and non-availability of spare parts are included under force majeure,it is very clear that CIL simply does not want the pact to be binding on it. Invoking force majeure should,ideally,be a last-resort option. The way CIL has structured the FSA,it can wriggle out by citing any one of these reasons,” an executive with a private power firm,which has refused to sign on the dotted line,said. NTPC Ltd is one of the firms that is holding out,while companies such as RP-Sanjiv Goenka Group’s Haldia Energy have written to the Central Electricity Authority highlighting “additional areas of concern” with respect to the measures CIL has adopted to insulate itself from the penal provisions,apart from pegging the penalty itself at an “insignificant” 0.01 per cent.

The worries of the power developers is compounded by the belief that this draft will be substantially retained for future projects to be commissioned by March 31,2015,thereby triggering fresh concerns on whether to agree to the conditions mentioned in the pact.

So far,a total of 306 million tonnes of coal is tied up for supplies to 67,872 MW of existing capacity through firm FSAs signed by Coal India Ltd. The last such pact was signed in March 2009.

Coal India not liable in case of

* Equipment,machinery breakdown

* Failure of contractors to deploy equipment and machinery

* Non-supply/delayed supply of equipment/spare parts by vendors

* Shortage/cut in power supply

* Non-supply short-supply of explosives by vendors

* Obstruction in transportation of coal from pithead to sidings by agitations/mob violence/riot