CIL drafted FSAs to favour public sector: Association of Power Producers

The Association of Power Producers (APP), yesterday, alleged CIL had drafted fuel supply agreements (FSAs) in a manner to pass on undue benefits to public sector companies. ''Discriminatory treatment by CIL to private power producers is giving undue benefits to State-run companies,'' APP director-general, Ashok Khurana said in a statement.

The statement added that draft FSAs were one-sided and not in accordance with the Presidential Directive and directives given by the prime minister's office.

According to the draft document, APP still retained many of the provisions which had been opposed by the industry.

Among the shortcomings included provisions related to unilateral review with CIL being the sole authority to decide regarding termination of agreement or satisfaction of its own conditions precedent, ineffective level of penalty quantum, frivolous force majeure conditions and many other one sided provisions.

The option for arbitration regarding FSAs was open exclusively to government companies, it said. The PMO had instructed, earlier this year that CIL sign FSAs with plants commissioned/yet to be commissioned between December 2011 and March 2015, which had been followed up by a Presidential Directive to the same effect.

On the issue of right to terminate FSA, APP alleged CIL had given itself unilateral right to terminate the FSA in the event there was no consensus between the seller and purchaser during joint review after 5 years or if there was any material change in coal distribution system.