Power India found that, Coal India Ltd (CIL) have released the draft of Fuel Supply Agreement (FSA) which proposed to be entered with the power producers.
As captured by Power India earlier, the penalty provisions for not honouring the FSA have been kept at abnormally low levels; further the CIL has refused to take any responsibility of supplying imported coal in case of lace of response from global suppliers to its tenders.
As captured in the Force Majeure Clause:
While imported coal will be supplied only on the basis of firm agreements with such overseas suppliers, failure to supply imported coal due to “global shortage, or delays caused by the supplier or no response to enquiries (by CIL) for supply of coal or logistics constraints in transportation of coal”
The detailed force majeure provisions also include failure of CIL's contractors to deploy equipment and machines.
The company has also declined to take the risk of procedural delays that include delay on the part of the Union or State Government for granting due mining licences or permits, delay in environment and forest clearances and land acquisition.
The power producers are asked to pay six per cent of the annual contracted quantity (ACQ) requirement as interest-free security deposit. Assuming that the total minimum requirement of the FSAs to be signed immediately is 69 million tonnes, the total security deposits amount to a little over Rs 400 crore.
As said by Dr. Ashok Khurana, Director-General of Associated Power producers.
“This FSA is heavily biased against the power sector developers,”
The body of private sector power producers have sought Prime Minister's appointment to push their case forward.
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