NEW DELHI: CIL board is likely to meet tomorrow to consider the model agreement with power producers for assured supply of the fuel in the wake of the Presidential directive for signing fuel supply pacts.
The government issued a Presidential directive on April 3 to CIL to commit a minimum 80 per cent 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 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 CIL, which is listed on the stock exchanges.
However, CIL may not face penalty if it fails to meet the commitment due to unforeseen conditions like flood or political unrest. The issue, which comes under the ‘force majeure’ clause, was discussed in the CIL board meeting held last month, sources said.
“It was discussed during the meeting that if CIL fails to supply the amount of coal committed to power firms under the agreement due to conditions which are beyond its control, like political unrest and strike, then the PSU will not be subjected to any kind of penalty,” the sources said.
Force majeure is a clause in a contract that essentially frees both parties from obligations when an extraordinary event or circumstance beyond the control of the parties, prevents one or both parties from fulfiling their obligations under the contract.