Signing FSA with CIL possible as early as Friday: NTPC

Ending a long drawn battle over coal quality issue and payment method, India's leading power generator, NTPC  has agreed to sign the fuel supply agreement (FSA) with Coal India .

Speaking to CNBC-TV18, NTPC chairman Arup Roy Chowdhury said that the company would sign the FSA as early as Friday once CIL board clears the agreement.

NTPC board has now given a thumbs up to signing FSA with the country's largest coal miner and has said that the company will make payment based on the quality of coal.

Below is the edited transcript of Chowdhury's interview to CNBC-TV18.

Q: The NTPC board has agreed to sign the FSA (fuel supply agreement) with Coal India. By when will the actual signing happen - can you give some sort of timeline on this?

A: I think any day. Coal India's meeting is tomorrow, if they approve it in their board then any day after that we can sign it.

Q: There was a disagreement on the quality of coal and the billing issue. NTPC resorts to gross calorific value of billing and that leads to mismatch in payments - as to what Coal India bills you for and what is finally paid by ntpc to them. Has the board agreed on a mechanism for that?

A: There were two main issues on FSA which we agreed now finally. One was on how to differentiate between the 2009 FSA which was earlier to that and the present one in a station where we are running coal with both the FSAs. So, that was resolved after discussion that the incentive on the pre 2009 will be paid only after 2012 SEQ commitments are met.

The other issue was on how to handle or treat coal which is below 3100 kilo cal because earlier the coal grades were only 8 grades upto A,B,C,D to G. Now, they have been made into 17 grades, so the coal has come into existance below 3100 whereas all our original linkages with 3100 so therefore we were having a problem because our designs etc do not cater for lower calorific value.

As per the new grading that they have done, the payment will be made on GCB value but there will be no incentive for the one which is below 3100. We will calculate the total quantity and 25% of that only will qualify for incentive. Now this was agreed finally after much discussion between both the organisations.

It went to our board today, it has been cleared by our board. Tomorrow is Coal India's board, I presume they will clear it tomorrow. Once that is done we can sign the FSA day after tomorrow as early as that if you want a date from us or maybe in due course.