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In addition, Coal India will pay a penalty of an average of 0.01% of shortfalls in supplies, according to Reuters.
Chairwoman Zohra Chatterji informed reporters of the penalty following a board meeting.
“For the penalty clause, we have decided to keep it at a minimum and it should be operationalised after three years,”Reuters quoted Chatterji as saying.
The government, Coal India’s largest shareholder, ordered the state-run company to sign fuel supply agreements with power producers, guaranteeing to supply 80% of contracted quality.
According to state media reports, Coal India will sign the agreements on April 20.
Coal India’s board had been against signing the deal, with the company initially missing a deadline for some agreements.
It is believed the coal giant hasn’t signed agreements with utilities since 2009 due to a reduced supply of fuel sources.
The company will import the fuel to overcome local production hurdles and reduce frequent power blackouts in the country.
