CIL pays Rs5,400 crore dividend; delays supply contracts with power companies

Coal India Limited (CIL) paid Rs5,400.49 crore as dividend to the government for the year 2011-12, which could possibly highlight losses to the government on the allocation of mining leases below remunerative prices.

Coal India chairman and managing director Zohra Chatterji presented the dividend cheque to the union minister of coal Sriprakash Jaiswal in New Delhi today.

CIL has made a substantial profit of Rs10,774.79 crore during the first nine months of the current financial year (April-December 2011-12). CIL has declared total interim dividend of Rs6,000.55 crore for the period and a turnover of about Rs42,996.44 crore for the period.

Coal India's board, however, has deferred the approval of fuel-supply agreements (FSA) with power companies amidst a scrutiny of the details of the issue, which can expose the state-run giant to heavy penalties.

While the prime minister's office (PMO) has asked Coal India to sign the agreements by the month-end, the PMO is also equally at unease with the leaked report of the Comptroller and Auditor General of India (CAG) that estimated a Rs10,00,000 crore loss to the government in the allocation of coal blocks to private parties and state-run agencies.

The signing of FSAs will force Coal India, which is running short of coal, to resort to costly imports at a time investors are already worried about the government's refusal to allow them to charge market rates, say analysts.