Private producers accuse Coal India of violating Fuel Supply Agreement

Coal India might run into rough weather with the legal authorities if it fails to disprove claims of the private power producers who accuse the world’s largest miner of violating the fuel supply agreements by under-filling the rail rakes they book for transporting FSA coal to them. According to media reports, the booking rates are higher than those set under FSA obligations and under utilizing the rake capacities. Since the landed cost of imported coal is double than that of the landed cost of coal supplied by CIL, the power producers are forced to pass on the high charges to the consumers thereby increasing their tarriff of electricity. Under the FSA, CIL can be booked for penalty if it books rakes that load below 65% of the estimated FSA supplies. However, in most cases, CIL books rakes with capacities to carry 80% FSA coal and escape the penalty, the reports added.

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