The Children's Investment Fund Management (TCI) and the Government of India failed to reach a consensus on the question of violation of Bilateral Investment Promotion and Protection Agreements (BIPA) in Coal India.
TCI said it would continue with its action against the Government over its investment in Coal India, and launch a separate law suit against the company, following a meeting with the Coal Secretary, Mr Alok Perti, on Tuesday.
Meanwhile, the Coal Ministry said there is ‘no need for any arbitration' with the London-based investor fund. “Why should there be arbitration? There is no real need. Issues can be sorted out amicably,” the Coal Secretary told newspersons after meeting TCI representatives.
Two views
Asked if TCI would still go for an arbitration, Mr Petri said, “I would not know that. We have discussed with them the issues and also asked them to send us further presentations if they have more issues and we will reply to them.”
Contacted by Business Line , Mr Oscar Veldhuijzen, partner at TCI, who attended the meeting by telephone from London, said TCI would be launching the case against Coal India, putting a “large financial claim” on individual board members, making them liable if they don't act in the interests of shareholders.
“We have a strong legal case. There has been a clear abuse of minority shareholders,” he said. TCI had waited till after the meeting to make the decision on the legal case, Mr Veldhuijzen said, “We wanted to give them a chance.”
Forthright criticism
TCI, the largest shareholder after the Government, has been vocal in its criticism over pricing of coal and fuel supply agreements. These caused a shortfall in profits of around $19 billion for Coal India, he estimates.
Mechanisms for keeping prices artificially low would “encourage corruption,” he said. Mr Veldhuijzen, however, described Tuesday's meeting as “extremely productive.” “The Government made it very clear that Coal India is free to set coal prices and that the Ministry is committed to washing coal, and those are two things that are most important.”
Demands commitment
“We are very happy to drop our case if they are willing to publicly commit to our pricing of all coal to the market in the forseeable future and commit to coal washing.”
“They are in denial.” He added, “The Ministry has not indicated how they will compensate us for the damage it has caused by interfering in coal pricing.”
“As far as BIPA is concerned, the Government has not discriminated against any investor. On other commercial issues, we told TCI that it will have to speak to Coal India to resolve them,” the Coal Secretary said.
TCI wants the Government to interfere more in the company affairs of Coal India. “We said that would not be appropriate as far as the Government is concerned. There has been no difference in what has been happening in Coal India pre or post IPO,” Mr Perti said.