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Coal India is ready to meet 65 per cent of the power companies’ fuel requirement for the first two years through domestic production. This would be despite signing an agreement for meeting 80 per cent of the demand.
Following the recent directive from the Prime Minister’s Office for signing the fuel supply agreements (FSA) by November for about 60,000 MW capacities, the company has decided to do so.
Coal India Chairman and Managing Director S. Narsing Rao talking to media persons here said that “There would be penalty applicable only if supplies fall below 65 per cent. For the gap of 15 per cent we would import at cost plus basis only if the buyer(s) wants. If the buyer doesn’t want, we would consider the 15 per cent as deemed supplies.”
The miner would supply up to 72 per cent of plants’ demand in the third year and 80 per cent in the fourth year, Coal Secretary S.K. Srivastava told media persons. Srivastava said that the price pooling mechanism is under consideration and talks are on with the Power Ministry. Whenever any final decision is arrived, Coal India board will review it.
TCI conflict
Srivastava cited the clause risk factors 10 and 25 mentioned in the red herring prospectus of Coal India filed during its initial public offer (IPO) as counter to The Children’s Investment Fund’s (TCI) allegations.
“This was made available to all prospective investors to consider while making a decision whether to make an investment in Coal India or not. Clause 10 reads that Coal India is selling coal at lower than the prices at domestic and international markets. And Clause 25 says that the interest of the Government as the controlling stakeholder of the company may conflict with interest of other shareholders,” Srivastava said.
“We will defend the allegations in court,” said Narsing Rao.
E Auction
Coal India is gradually bringing down its e-auction quota to seven per cent from 10 per cent earlier of total production to meet increasing demand from the power sector.
“As of now, we were selling around 50 million tonnes through e-auction,” said Rao. The miner is expected to sell nearly 49-50 million tonnes through e-auction in this year.
ICVL joint venture
Coal India Chairman said that they have asked the ICVL management to give a presentation to its board on why the miner should continue with the ICVL joint venture.
Coal India has already informed its nodal Ministry that it would like to discontinue its venture with ICVL.
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