PMO scales down target for CIL on fuel supply to power units

PMO scales down target for CIL on fuel supply to power units New Delhi: In a bid to resolve the fuel row, the Prime Minister's Office Friday asked state-owned Coal India (CIL) to sign the pacts with power producers with assured minimum coal supply of 65 percent of the commitment.

The PSU firm has also been asked to go in for coal imports through the state-owned agencies like the STC and MMTC, sources said.

CIL had its way in terms of making much less commitment for assured supply of 65 percent for the first three years of the fuel supply agreements (FSAs) from 80 percent, as directed by the Prime Minister's Office (PMO) earlier.

But in the fourth year, the supply has to increase to 72 percent followed by 80 percent in the fifth year of the agreements, sources added.

However, the company will have to pay damages, equivalent to 10 percent of the value of the shortfall in supply to the power producers. Besides, there would be no moratorium on payment of penalty.

The directions to the monopoly supplier CIL were given after Pulok Chatterjee, Principal Secretary to the Prime Minister, took a meeting of Coal Secretary S K Srivastava and CIL Chairman and Managing Director S Narsing Rao.

CIL which accounts for over 80 percent of the domestic coal production will take the PMO directions before its board, which is likely to meet next month.

"We will now be having board meeting of Coal India. They may take a final view on all these issues (penalty, FSA, coal imports)," Srivastava told reporters Friday after the meeting.

CIL, which missed the revised production target last fiscal and produced 435 million tonnes of coal, has set a production target of 464 MT for 2012-13.