Coal India Limited under spotlight for failing to meet supply commitments; PMO meet to iron out issues

22 JUN, 2012, SOMA BANERJEE, ET BUREAU
Coal India Ltd, the primary coal producer in the country, under flak for failing to meet its commitments on coal supplies, may have to pull up their socks and come up with some serious explanations as senior officials of the ministry and the company, meet PMO officials later today.

The meeting will deliberate on a 9 point agenda including a moratorium on the penalty, pooling of prices of imported and domestic coal, compensation clause for failure in supplies of coal, production schedule among others. CIL has said that it can supply only n66 per cent of the coal as against a requirement of 80 per cent. CIL chairman, coal secretary and advisor to the coal ministry will be attending the meeting this afternoon.

CIL has failed to meet its commitments of signing bankable fuel supply agreements with power companies despite a presidential directive. Lately, CIL signed about 27 FSAs but power companies have found them to be unviable as banks refuse to fund such projects.

Companies like NTPC and DVC, two government-owned power companies have refused to sign the fuel supply agreement on the current terms.

Sources indicated that CIL will make a fresh presentation on the FSA to the PMO today making a p-itch for doing away with the force majeure clause and a moratorium of three years before the trigger level for compensation kicks off. The PMO, is unlikely to take CIL's explanations or tactics to delay lightly given that several power projects are lying idle for want of coal. CIL has maintained that it is in no position to give the commitments now. This would mean power companies depending on imported coal that would jack up power tariffs.

The PMO has been directly monitoring the coal supply scenario as it has been stuck since the last six months. Despite a direct intervention by PM's principle secretary Pulok Chattterjee, CIL has failed to meet the commitments. This has been a major embarrassment for the government as CIL is a government-owned company and its defiance to fall in line has raised several questions over the role of its management.