"Model Fuel Supply Agreement (FSA) applicable for state- nominated agencies has been agreed by CIL in its meeting," the PSU firm said in a letter to its subsidiary firms including Eastern Coalfields, Central Coalfields and Western Coalfields among others.
"The agreement shall, unless terminated in accordance with the terms, hereof, remain in force for a period of one year," the letter said.
"The terms of Agreement may be extended for another year upon mutual agreement in writing by both parties provided nomination is also received for the second year," it added.
The development comes ahead of company board meeting early next month to approve model fuel supply agreement (FSA) which the coal major would sign with power companies.
In the last board meeting held on August 13, the board members had sought some more time go through the clauses of both the model pacts and the side agreement minutely.
"Due to shortage of time the board members could not go through the clauses closely, therefore it was decided to place the model FSA and side agreement after thorough examination for approval in the next board meeting of CIL likely next month," a source had said.
It has reached a consensus on supplying a minimum of 80 per cent of the contracted quantity to power firms.
The issue of penalty has been a bone of contention as power firms, led by NTPC, which had been opposing the "meagre" penalty clause in the earlier FSA of only 0.01 per cent, that too applicable after three years of shortfall. They refused to ink to fuel supply agreement.
So far, only 29 power companies, including Lanco and Adani have signed FSAs with CIL.