CIL's supply pact to transfer $19 bn to private sector
12 Apr 2012
Coal India's (CIL) minority shareholder , British hedge fund Children's Investment Fund (TCI), yesterday alleged that directing the public sector coal giant to sign fuel supply pacts with power producers would amount to "direct transfer" of $19 billion to the private sector.
Making a presentation to the board of Coal India, which is likely to meet next week, the Children's Investment Fund (TCI) said that the government was being pushed by large industrial companies into imposing new fuel supply agreements (FSAs) on CIL.
On 3 April, the government issued a presidential directive to CIL to commit a minimum assured fuel supply to the power producers, with penalties in the event of failure to meet the committed supply. (See: Coal India ordered to sign FSAs with power companies)
The move raised the hackles of TCI and some of CIL'sindependent directors on the board, which is to consider a model FSA soon, even as chairman and managing director designate S Narsing Rao is not to join for another two weeks.
According to TCI, the coal prices should be linked to market rates as it would up the profitability of Coal India.
"We estimate that if CIL sells its FSA coal at market price levels, its profits increase by $19 billion...Indian households consume close to 200 billion units of power per annum, which can entirely be paid for by dividend from Coal India," TCI said in a letter to Coal India.
.webp)
