Presidential Directive To CIL On Fuel Pacts Likely This Week

NEW DELHI: The government may issue a Presidential directive to Coal India (CIL) this week to enter into fuel pacts with power producers with 80% supply commitment, after taking stock of the PSU’s production plan. The development comes in the wake of CIL failing to meet the PMO directive to sign fuel supply agreements with power producers by March 31, with 80% delivery commitment.
“The coal ministry will hold a meeting with the chairman and managing director of Coal India and heads of its subsidiaries this week to take a stock of their production plans. After the meeting, a Presidential Directive is likely to be issued,” a top official in the coal ministry told PTI.
The coal ministry has already conveyed to CIL that it must sign the FSAs (Fuel Supply Agreements) with the power firms, notwithstanding opposition from several independent directors on Coal India board.
Against the backdrop of acute fuel crunch faced by power firms, the Prime Minister’s Office (PMO) had held a meeting with senior representatives of the power firms recently and had directed the government-owned CIL to sign the FSAs.
However, the move on assured 80% supply has been questioned by several independent directors of CIL and a UK-based minority shareholder, The Children’s Investment Fund (TCI). CIL had sought more time to work out agreement with the consumers from the power sector. The President of India can issue directives to the conduct of CIL’s business as long as it is a government company. The government can also issue instructions to CIL board according to its Memorandum of Association. Such a directive will have to be accepted “on account of public interest. ”