CIL board approves signing FSA with power companies without PPAs

Coal India board has approved signing of FSA with power producers even in the absence of long-term purchase pacts between generation companies and distribution firms, but fuel supply will start only after inking of buying agreements.

“Board (Coal India) agreed ….(that) coal companies might sign FSA (Fuel Supply Agreement) without insisting for long-term PPAs,” Coal India said in a letter to its subsidiaries.

A power purchasing agreement (PPA) is signed between a power producer and a buyer usually a electricity distribution company.

The letter further said that, however, the commencement of coal to power generations companies will be subject to “furnishing long-term PPA with discoms.”

The proposal had come up for consideration during the board meeting held recently.

Coal India in the letter said that a decision at the level of Prime Minister Office was taken regarding signing of FSA with new power plants without waiting for PPA, subject to condition that the supply of coal will commence only after the plant is commissioned and long-term PPA is signed.

“It was further decided that the supply of coal will be restricted to the quantity required for generating electricity to meet the commitment as per PPA,” the letter said.

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