Power companies seek three-way fuel pacts with coal companies, Railways


Private power companies have urged the Centre to enable signing of tripartite fuel supply agreements with coal companies and the railways with provisions of penalties to help avoid a coal crisis at the power stations.

The companies, in a meeting with power and renewable energy minister RK Singh on the low coal stocks at power plants, demanded assurance of adequate liquidity for electricity generators by way of timely payments by the state power distribution companies.

Ashok Khurana, director general of Association of Power Producers, told ET that the power companies sought “a remedy for the current disbalanced contractual provisions for coal procurement, wherein the generators have a stringent and unavoidable obligation of always making full payment in advance for the coal, while the coal companies and railways have much lighter, or even nil obligation to ensure that the desired quantity and quality of coal reaches the generators.”

He said, “It was suggested the ministry of power may push for a tripartite fuel supply agreement between the generators, coal companies and railways to delineate responsibilities and obligations of each party and put in place an equitable penalty mechanism for all stakeholders to ensure balanced distribution of risks.”

Khurana said Singh asked the association to send the demands in a memorandum that can be forwarded by the ministry to states and other stakeholders.

Singh urged the private power companies to decide upon terms with the central power firms to start regulation of electricity to defaulting states, in order to avoid the current practice of selective payments being made to certain generators, he said.


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