Coal India modifies performance incentive clause in FSA

State-owned Coal India (CIL) has tweaked the performance incentive clause in fuel supply agreements with non-power consumers.Under the performance incentive clause, if the seller (Coal India) issues sale orders for coal to the purchaser in excess of 90 per cent of the assured contracted quantity in a particular year, the purchaser shall pay the seller an incentive.

Under the revised clause, performance incentive is applicable only on actual delivered quantity of coal.

"The relevant provision of the performance incentive clause of non-power FSA models has been modified to impart the required clarity," Coal India said in a letter to its subsidiaries.
In the meeting held in early this year "it was deliberated that some clarity shall be brought in the provision for computation of performance incentive clause in case of now power model FSAs to clarify that such PI is applicable only on actual delivered quantity of coal," the letter said.

Amid continuous delays, the maharatna PSU has so far signed 160 fuel supply pacts with power units.

The Cabinet Committee on Investment (CCI) had earlier stated that the time lines for signing of fuel supply pacts for power projects of 78,000 MW capacity should be met.
CIL has to sign 172 FSAs for a capacity of 78,000 MW.

Two deadlines set for the signing of FSAs by CIL with the power producers could not be adhered to. The Coal Ministry had set the deadline of August 31, 2013 for signing of the FSAs, which could not be met.