Coal India board on Tuesday agreed to a hefty penalty of up to 40 per cent if it fails to supply the committed quantity of the fuel to power firms, paving the way for signing new FSAs with electricity producers.
"If
CIL supplies below 50 per cent (of the contracted quantity), the fine would be 40 per cent," Coal India Chairman S Narsing Rao told reporters after the board meeting.
The penalty is 40 per cent of the value of fuel not supplied.
If the supply is between 65 and 80 per cent, then the penalty is 1.5 per cent, he said.
For supply between 60-65 per cent of the contract, CIL would attract a penalty of 5 per cent, while the penalty is 10-20 per cent for providing coal between 50-60 per cent of assured quantity.
There will be no penalty if Coal India supplies 80 per cent or above the committed quantity of the fuel.
Coal India Ltd (CIL) has already reached a consensus on supplying a minimum of 80 per cent of the contracted quantity to power firms.
The issue of penalty has been a bone of contention as power firms, led by
NTPC , had been opposing the "meagre" penalty clause of only 0.01 per cent, that too applicable after three years of shortfall in the earlier pact. They have also refused to ink to fuel supply agreement.
Of the committed 80 per cent of the assured supply, CIL would meet 15 per cent through imports and 65 per cent through domestic production. It is estimated that CIL would need to import 20 million tonnes of coal this year to meet the demand of power companies.
"We have resolved to revise the FSA. The 80 per cent trigger remains. Initially State Trading Corporation and MMTC will do (the import)," Rao said.
He added that CIL would also start importing coal on a small scale so that it is not "totally dependent on others over a period."
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