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Home News Power Sector News NTPC and Coal India Limited to enter into FSA soon at 90% trigger level

NTPC and Coal India Limited to enter into FSA soon at 90% trigger level

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NTPCCoal India Limited and the National Thermal Power Corporation (NTPC) are set to sign the Fuel Supply Agreement (FSA) by the end of this month, ending months of tussle over the pact, especially over the issue of trigger level of coal. All outstanding issues pertaining to the FSA between CIL and NTPC had been resolved and both the entities were set to sign the pact by the end of this month, a highly placed CIL official told Business Standard.

The official further said that apart from NTPC, the different state power utilities were also expected to ink the FSA with CIL and the Central Electricity Authority was taking the lead in this matter.

It may be noted that three different state power utilities have already signed the FSA with CIL. The other power utilities were awaiting the signing of FSA between CIL and NTPC.

Though FSA was introduced in the New Coal Distribution Policy of the Union coal ministry in 2007, the agreement was delayed mainly on account of the deadlock between CIL and NTPC over the contentious issue of trigger level of coal.

After months of dithering, CIL had at last agreed to raise the trigger level to 90 per cent which was in accordance with the demands of NTPC and other power plants in the country. Trigger level is the minimum assured level of coal supply and offtake, failing which both the coal supplier and the consumer would attract penalty.

The demand to raise the trigger level to 90 per cent was made by the power producers amidst inadequate coal supplies which had slipped many power plants in the country into the critical and super critical states with coal stocks of less than seven days and four days respectively.

After the signing of the FSA between CIL and the different power producers, including NTPC, the coal stock position at the power generating stations was expected to improve as the long-term pact between the producers and the consumers was aimed at ensuring a dedicated supply of fuel.

However, the CIL official warned that the power plants would continue to reel under critical and super-critical conditions with respect to coal stock if they did not import their balance requirement of coal in sync with their rising power production.

According to the data compiled by CEA (as on April 12 this year) on the coal stock position, 13 large power stations were facing super-critical state with coal stock of less than four days while eight other power plants were in critical condition with coal stock of less than seven days.

While pit-head power plants in the country were expected to maintain coal stock of at least 15 days, the power stations located away from the mines were to have coal stocks of 21-30 days.

Source - Business Standard

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