The UK-based TCI, minority shareholder in Coal India, has written to Prime Minister Manmohan Singh seeking an audit by CAG for the fuel supply pacts (FSAs) signed by the public sector miner.
“Corruption in the allocation of coal FSAs necessitates an immediate CAG investigation,” Oscar Veldhuijzen, Partner of TCI, wrote in his communication to the Prime Minister.
TCI has shared the letter with media. This is not the first time the investor has raised such issues. It has already filed petitions in New Delhi and Kolkata Courts against Coal India and its board of directors. According to TCI, the miner has taken steps that have negative impact for investors.
In one of its previous demands, it has also sought removed of Coal India Chairman Narsingh Rao.
TCI wrote, “We are writing to urgently remind you of massive systematic corruption in the Indian coal industry due to the fuel supply agreement (FSA) method of selling coal used by CIL. We believe that you will be well aware of this matter, given your own past role as Minister of Coal”.
The FSA system creates large scale corruption as companies are incentivised to pay bribes in order to obtain coal at up to a 70 per cent discount to international market prices, the investor has alleged.
“We request formally that the CAG launches an immediate investigation into the corruption of the FSA system. The CAG previously investigated and proved substantial corruption in the allocation of coal blocks due to a similar system of not using auctions for allocation of coal and encouraging the payment of bribes to receive free coal blocks,” the letter said.
TCI bought Coal India shares in 2010 when the miner launched its initial public offer. Currently, the foreign investor holds less than five percent stake in Coal India.