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Opposition from independent directors left the Coal India board meet on Thursday inconclusive. The board had met to clear draft fuel supply agreements (FSAs) with power sector.
According to sources, at least two of the seven independent directors opposed the move to sign the pacts with 80 per cent trigger level.
Trigger level indicates the minimum supply assurance on the past of the supplier, failing which CIL should pay penalty to the buyer. According to a statement from the Prime Minister's Office in February, CIL was scheduled to enter such pacts with nearly 50 power units – commissioned between April 2009 and December 2011 – before March 31, 2012.
Linking the development with the recent allegations by The Children's Investment Fund Management (TCI), UK, accusing the monopoly for not protecting interests of the minority shareholders, sources said that the independent directors felt that the proposed trigger level may prove detrimental for the commercial interests of CIL. As in December 2011, TCI holds 1.01 per cent stake in CIL.
Referring to the lower price paid by the power sector for coal, directors proposed that CIL should lower the trigger level and, divert excess coal (over and above trigger) to e-auction to ensure profitability. One of the independent directors also submitted a detailed note in this regard. The board in its pursuit to evolve a consensus avoided a poll on the resolution, sources said.
Confirming the development, a Coal Ministry official said that no FSAs would be signed in March. He, however, indicated that the Government may direct the company to sign the pacts, as suggested, overruling opposition.
“Shareholders of CIL have signed a MoA (memorandum of association). The Government can issue directives or instructions to board of CIL according to MoA. Eventually the directives will have to be accepted on account of public interest,” he said.
Power major NTPC said that it has standing memorandums of understanding with the coal miner for all the plants commissioned after 2009. “We are very hopeful of signing FSAs with CIL,” said the Chairman, Mr Arup Roy Choudhury.
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