Govt says may tweak penalty clause in FSA if required

Amid NTPC refusing to ink fuel supply pact with CIL due to its objections on certain clauses of model fuel supply agreement, the government on Tuesday said it was trying to address the complains of the power PSU and if required may tweak the penalty clause.

Updated: May 22, 2012, 18:46 PM IST

New Delhi: Amid NTPC refusing to ink fuel supply pact with CIL due to its objections on certain clauses of model fuel supply agreement, the government on Tuesday said it was trying to address the complains of the power PSU and if required may tweak the penalty clause.

"We are trying to address the complains of NTPC (with regard to penalty clause of model fuel supply agreement(FSA)). If required changes may be made in the penalty clause and we will also ask Coal India (CIL) board for the same," Coal Minister Sriprakash Jaiswal told reporters.

NTPC had strongly objected to CIL's new clauses in the FSA, including penalty clause which has been brought down to the level of 0.01 percent from the earlier 10 percent.

The minister admitted that the penalty in case of any supply shortfall on part of CIL had been reduced substantially by the coal PSU board.

"CIL board had reduced the penalty clause substantially and NPTC and a few players in the private sector complained about it," the minister said.

Earlier, NTPC had said it would accept only the revised minimum fuel supply level and not other changes suggested for signing the new pact with CIL.

"I will only sign the FSA with change in the trigger point, because that is the direction given by the government. why should I accept 10 or 15 more changes," NTPC Chairman and Managing Director Arup Roy Choudhury had said.

Against the backdrop of acute fuel scarcity hurting power generation, the government has directed CIL to sign FSAs with power generators and the minimum supply level has now been fixed at 80 percent.

With persisting uncertainty over FSA, Power Minister Sushilkumar Shinde had written to the Prime Minister's Office (PMO) seeking intervention on the issue.

Shinde's communication came after the Central Electricity Authority (CEA) held discussions with various power generators on May 9 to gather their views on the FSA problem.

PTI