NTPC’s denial of CIL’s new fuel supply agreement may jeopardise the coal supply to power producers…

India's largest power sector company NTPC's denial to sign the newly formulated fuel supply agreement for new power plants is likley to jeopardise the government mandated plan to secure committed coal supply to power producers.

NTPC accounts for more than 35% of the quantity that CIL would have to supply under the new FSA. Of the 51 FSAs which six CIL subsidiaries (out of nine) would have to sign to supply an additional 70 million tonne to the new power plants to feed 28,000 MW of new generation, supplies to NTPC only would be 25 million tonne to its capacity addition during 2009-12.

But NTPC chairman Mr Arup Roychowdhury made clear that his company would not sign the new FSA since there was nothing of supply guarantee in it.

 

Although CIL's chairman Mr S Narsing Rao said his company is in talks with NTPC to resolve issue, the matter have become aggravated with NTPC now also denying to pay for coal on Gross Calorific Value based pricing. NTPC wants CIL to go back to the old regime of useful heat value based pricing.

Mr Roychowdhury said the company's requirement was not matching with the grades, which CIL has created under the GCV classification. He said that "The way CIL has created the new GCV grades are not beyond doubts. NTPC cannot pay for coal which didn't have quality assurance.”

 

The matter has already been referred to the power ministry to take it up with the coal ministry an official said.

 

 

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