Coal India ignores NTPC call, asks it to sign up

Coal India has upped the ante in its confrontation with NTPC by sending out letters asking it to sign fuel supply agreements (FSA) which make absolutely no provisions for any of the demands raised by the power major.

These include changes in the pact incorporating safeguards, ensuring supply guarantees and changes in existing gross calorific value (GCV) system.

While the heads of two public sector behemoths—the country’s largest power producer and the near-monopoly producer of coal—have gone public with their views with the former even refusing to sign FSAs for new units that have come up in existing plants, and the head of the latter saying talks are on to resolve the issue, the FSA letter available with DNA shows that none of the demands has been addressed.

The FSA letter sent by CIL to NTPC on Friday to the latter’s head office at Noida for two power plants, Farakka Stage 3 unit and Kahalgaon Stage 2 Phase 2 unit aggregating 1000 mw capacity, a copy of which is available with DNA, refers only to the model FSA dated April 19 and no subsequent communication or any proposed changes.

Both the units at Farakka and Kahalgaon are brownfield projects and CIL has based its FSAs for these two units on the GCV system while NTPC has demanded that they should be on the earlier useful heat value or UHV system applicable for the old generating units.

“In terms of directive from the ministry of coal … you are invited to execute FSA in the model of new SEB/state gencos through LOA for supply of coal to Farakka Stage III and Kahalgaon Stage II, Phase II Unit 7 for annual contracted quantity of 23,12,00 mts each of GCV grade band of 4001-4300 kcal/kg and below, subject to PPAs being executed by you with discoms,” the CIL letter to NTPC’s general manager (fuel management) said.

“Subsequent to the decision by the board and approval of the model FSA, copies of which were given out to our subsidiaries, there hasn’t been any further instructions to make any changes in the FSAs including those meant for NTPC. So, the letter sent by us to NTPC on Friday is based only on the model FSA of April 19,” a CIL official said.

Curiously, NTPC has only verbally communicated to CIL that it won’t be signing the FSAs.

The letter has asked NTPC to provide, among other things, an undertaking giving details of the PPAs with Discoms including the period of such PPAs and affidavit or declaration indicating that no coal block has been allocated to these two units.