Some of the power companies in the country are objecting a fuel supply deal proposed by Coal India (CIL) mainly due to the penalty clause.

CIL has entered into the fuel supply agreement with 13 power units including Reliance Power's Rosa Power project. However, some firms are opposing the penalty clause in the agreement and have not signed the agreement with the company.

Central Electricity Authority (CEA) has approached the PMO for intervention over the opposition of some power units to the clause included in the fuel supply agreements (FSAs). The differences are over penalty that is to be paid by the coal major if it fails to supply 80 per cent of the contracted fuel to them. NTPC is among the companies that have refused to sign FSAs.

The FSA includes clauses that say that power units will see their supply terminated if they divert coal for other uses. It also includes penalty of 0.01 per cent in case the unit does not comply with the agreement terms and conditions.

Coal Minister Sriprakash Jaiswal has said that the government is working to make sure that affordable electricity is available to everyone and it will not be deterred by threats of lawsuits by minority shareholders in working towards achieving that goal.

Jaiswal was speaking about a threat of lawsuit by London-based The Children's Investment Fund (TCI). TCI warned that it might file a legal case against the India government alleging that the country's government could have short-changed other investors in Coal India.