Private developers have cried foul over Coal India’s (CIL) move to adopt differential contractual regimes for supply of coal to private and public sector power plants and warned that these provisions violated the principle of natural justice and woud not stand up to legal scrutiny.
The model fuel supply agreement ( FSA) issued by CIL recently contains different provisions for independent power producer (IPP) and central sector generating stations in matter relating to termination of contract, security deposit, suspension of coal supply and settlement of disputes. The new FSA will apply to projects commissioned after March 2009.
“Introducing the concept of differential FSAs now is contrary to the principle of natural justice and would not stand the scrutiny of law,” said Ashok Khurana, director general, association of power producers, a body of private power companies.
As per the terms of the model FSA, CIL can unilaterally terminate FSAs signed with private companies in case of non-consensus between seller and buyer during joint review after five years. But in similar cases involving public sector companies, final decision will be taken by the government. Similarly, while the model FSA provides for arbitration mechanism to resolve coal supply disputes between CIL and government-owned power generators, no such safeguard has been mooted for private generators.