CIL's FSA deadlock ends, penalty kept minimum at 0.01%

Finally, the stalemate over new fuel supply agreement (FSA) for coal has come to an end. The Coal India board today met at Kolkata to decide on the implementation of the GoI directive on FSA's, reports CNBC-TV18.

Emerging from the meeting, Coal India's acting chairperson Zohra Chatterji said the company had decided to finalise the schedule for the FSA. The penalty has been kept a minimum of 0.01% but will become operational only after three years. Responding to questions on likely imports - Chatterji added that issue would be discussed and finalised separately.
Chatterji said, "For the penalty, we have decided to keep it at a minimum and it should be operationalised after three years. We are to sign within 15days of date of issue of directive. That  would be before April 20."
The government issued a Presidential directive on April 3 to Coal India to commit a minimum of 80% of fuel supply to power producers, failing which the PSU would be subject to paying a penalty.
The directive was issued to the PSU, as it did not meet the deadline of March 31, set by the Prime Minister's Office for CIL to enter into agreements with power producers which were facing fuel crunch.
As the government has a majority stake in CIL, it has powers to direct the company on a particular course of action. The quantum of penalty has been left to CIL and the issue would come up for discussion at the meeting, sources added. Earlier, independent directors had objected to any government diktat to Coal India, which is listed on the stock exchanges. (With inputs from PTI)