“Due to unavoidable circumstances, meeting of board of directors of Coal India which was scheduled to be held on Tuesday the 10th July 2012 is postponed,” the Company Secretary wrote on Monday.
However, sources told NDTV Profit that the meeting was pushed back because the twin issues of increasing a penalty on Coal India and minimum supply amount have yet to be finalized.
“Since Coal India board meet on Tuesday was to finalise the new FSA, and there was no consensus between Coal Ministry and Power Ministry on the PMO directive of trigger level and penalty, it was decided to postpone the meeting till the time a consensus is arrived on” a government official said on condition of anonymity.
The meeting had also been expected to finalise a directive from the Prime Minister’s Office (PMO) for signing fuel supply agreements (FSAs) with power producers and end the uncertainty in the sector.
Coal India is liable to pay a penalty if it fails to reach a minimum level of coal supply under the FSAs. The second issue is that a minimum level that, if not met, would trigger the penalty is yet to be decided in the contracts with power firms.
No new date has been set for the board to meet, leaving the issue of access to the critical fuel unresolved.
The PMO last Friday decided to stick to the earlier 80 per cent trigger level, sources said, while Coal India has proposed a 65 per cent minimum supply level. Coal India and power firms have reached an impasse over the two issues of trigger and penalty. The public sector coal firm, which has a virtual monopoly on coal supply in the country, has earlier refused to increase the penalty it would attract from the board-approved level of 0.01 per cent of the cost of merchant coal bought by private power producers.
The Coal Ministry, said sources, has called for another meeting between Coal India, the ministries of power and coal, and representatives of power producers. Earlier, Coal India had informed the PMO that it would only agree to a trigger level of 65 per cent for first three years, and an 80 per cent trigger level from 2016-17. However, the power ministry has rejected this deal.
The Board was also expected to discuss the issue of import of coal and pool pricing for imported coal. The Coal India management has not yet finalised an import program. A number of power producers, however, have had to import coal directly at high prices to meet their needs.
Coal India’s production target for 2012-13 is 464 Million Tonne (MT) and given its ramp-up for coal and power, the company would be stretched to its limits if it agrees to a 65 per cent trigger level, said an independent Director of the Coal India Board. He declined to be named due to confidentiality issues.