Model Coal Supply Agreement

Model Coal Supply Agreement

Coal India has optimized the fuel supply pact model for new private power plants to allow them to modify/complete the electricity supply contract (AAE) more than once a year. „By specifying the annual contractual quantity (QCA), it was anticipated that, for each change in the percentage of AAEs (long-term), a corresponding change in the ACQ would be made by a subsidiary agreement. The firm`s Investment Committee (CCI) had previously stated that the deadlines for signing fuel supply pacts for energy projects with a capacity of 78,000 MW had to be met. Due to ongoing delays, CIL has so far signed 160 fuel supply contracts (FSA) with power plants. „To date, Coal India has signed 160 fuel supply contracts (FSAs). There are still a few and a signature,“ said a Coal India official. Electricity projects with a capacity of 78,000 MW have been approved by the committee on economic affairs (CCEA) of the firm for the supply of coal. For these projects, FSAs would be signed for 172 units with 134 letters of insurance (LoAs). The AAE is a contract between two parties, one that produces electricity (the seller) and the other that wants to buy electricity (the buyer). „However, such a change is permitted once a year and will not take effect until the beginning of the next quarter,“ a recent letter to Coal India subsidiaries states. „Given that the above destination plants oppose the revision of the ACQ more than once a year, whereas they could obtain additional long-term AAEs in the same year, the corresponding provision was considered amended to give these plants flexibility to modify/complete the AEA once a quarter,“ he said. “ (Total) 177 loAs (Letter of Assurances) were spent by DER CIL and its subsidiaries on energy projects that were to be commissioned during the 11th and 12th Five-Year Plan. These loAs cover a capacity of about 1.08,000 MW,“ says a document from the Ministry of Coal.

Two deadlines for the signing of FSAs by the CIL with the electricity producers could not be met. The Ministry of Coal had set an August 31, 2013 deadline for the FSA to sign, which could not be met. The second deadline was set for September last year.