Pvt cos buying from CIL won’t need security deposit

Private sector companies buying coal from Coal India Ltd will not need to put up any security deposit from now. Bowing to pressure from the power ministry, state-run Coal India Ltd has approved a re-drafted blueprint on executing Fuel Supply Agreements (FSAs) removing all such provisions that had irked power producers.

The CIL board has agreed to remove the provision under which private sector power producers were required to deposit 6 per cent of the base price of coal as security deposit before signing the FSA. The world's biggest coal miner has also yielded to the demand of the power ministry by deleting a clause in the FSA which empowered CIL to unilaterally terminate the FSA with a buyer in case of a dispute between the both. If disputes persist then the matter would be referred to coal ministry for their resolution.

A top coal ministry official told The Indian Express, CIL has also removed a clause asking power companies mandatorily clear at least 5 per cent of their annual contracted quantity from CIL mines, basically Central Coalfields, Mahanadi Coalfields and Southeastern Coalfields. Coal samples will also be allowed to be tested at third party sites by September 2013. A clause to this effect would be inserted in the FSAs to be inked for which modalities are being worked out, the official said.

As a partial relaxation of rules, CIL will also not insist that companies have to sign power purchase agreements when they approach the PSU. However, withdrawl of coal would be subjected to such agreements in place. CIL Chairman S Narsing Rao said the company would examine the complaint that coal companies are charging 40 per cent extra premium on the fuel being supplied to tapering linkage holders especially to those having PPAs with discoms, the official informed.

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