Blaming Coal India Ltd (CIL) for keeping coal prices “artificially low”, the UK-based hedge fund TCI today said raising prices of the fossil fuel to international levels would result in more than doubling of the PSU firm’s net profit at Rs 55,000 crore.
In a letter dated February 28 to the Finance Minister, P Chidambaram, The Children’s Investment Fund Management (TCI), a minority shareholder in Coal India (CIL) said: “The Indian government’s policy of interfering in the affairs of Coal India to keep coal prices artificially low is destroying CIL’s value.”
“If coal prices were raised to international market levels, the net profits would increase more than two times to Rs 55,000 crore,” it said.
The letter further said Coal India at present sells coal under fuel supply agreement at a discount of more than 50 per cent to international market prices and based on current prices, CIL is likely to generate “Rs 23,000 crore” of profits by March next year.
CIL had reported close to 9 per cent rise in consolidated net profit for the third quarter ended December 2012 at Rs 4,395 crore.
For the fiscal ended March 2012, the consolidated net profit of Coal India stood at Rs 14,788.2 crore.
In the letter, TCI partner Oscar Veldhuijzen said artificially low prices are “bankrupting the people of India and will result in dismal economic growth.”
It also said the government’s interference in the CIL affairs was depriving the people of India “of the true value of CIL, which should be over Rs 8,25,000 crore.”
At the close of trading today, the market value of Coal India stood at Rs 1,95,996 crore.