Have sought details from TCI Fund on Coal India: Coal Min

Moneycontrol Bureau

The Coal Ministry’s meeting with The Children’s Investment Fund (TCI) over alleged violations of international treaties related to its investments in state-owned Coal India has proven to be inconclusive.
"I think matter can be solved without arbitration and amicably," Coal Secretary Alok Perti said.
The government, post the meeting with TCI said that it wants to settle the matter amicably after TCI claimed the PSU was not protecting minority shareholders’ interest and harming the company by not opposing fuel supply pacts, ordered under a Presidential directive.
The Coal Ministry agreed the government was interfering in fuel supply agreements (FSA).
The government also said it would not interfere in Coal India’s commercial matters and that the board of the PSU would decide on price increases, free from any government interference.
The ministry further clarified that details were being sought from The Children’s Investment Fund on Coal India, according to a NW18 report.
The UK-based hedge fund had threatened to take legal action against the state-owned firm earlier this year for breach of fiduciary duties.
It said the state miner reversed a price increase under pressure from power producers in January.
CIL has a minority stake in the PSU but is the biggest foreign investor in the company.
TCI had said in a letter to the Finance Ministry - The Republic of India’s recent conduct with respect to CIL has seriously impaired the business activities and operations of CIL and has contravened each of the treaties.
On Monday, CIL reported its first decline in quarterly profit since listing in 2010, weighed down by a steep increase in wage bills. The government has said today that Coal India can absorb a wage hike provided output meets its aims.
Coal India is scrounging for washing coal. In a January 2012 Business Standard report, overall, 20% of coal produced in India is washed, compared to 50% globally.
Coal washeries raise the cost of production but save on volume – extraneous matter is removed – and carrying cost. Most importantly, washed coal is less polluting.
Going by publicly available figures, Coal India’s coal washing numbers appear to have stagnated at 40 million tonne for most of the last decade.
At today's meet, the Coal Ministry said it is committed to coal washing but remained unclear on the incentives for the same.
TCI's investments in CIL are through TCI Cyprus Holding Ltd and Talos Capital Ltd.
The hedge fund had also requested for formal negotiations with Indian government on the issue for amicable settlement of the claims.
"Failing such settlements within six months, we reserve our rights to initiate arbitration" in accordance with Cyprus and UK treaties, TCI had said. Also watch the accompanying video. (With inputs from Agencies)