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Friday, February 17, 2012

Indian government orders CIL to ink FSA to end power shortages

Friday, 17 Feb 2012

Finally, Indian government has acted to alleviate chronic power shortages that hinder its economic growth, ordering its monopoly coal miner Coal India Limited to guarantee long term supplies or face penalties.

It asked CIL to sign 20 year Fuel Supply Agreements with power projects that are due to be commissioned by 2015 and have an agreement with distribution utilities to sell power. This would help power plants with an estimated capacity of more than 50,000 MW.

Until now, Coal India's long term contracts were for a five year period and the last one it signed was in 2009.

A government statement said that the government decision followed intensive lobbying by top executives from India's power companies, who had sought the help of prime minister Dr Manmohan Singh to boost supplies of coal.

Domestic coal supply has fallen short of targets, largely due to regulatory hurdles faced by miners, while poor infrastructure hinders the transport of imported coal, leaving many power plants running below capacity.

(Sourced from Reuters and CNBC TV 18)

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