NEW DELHI: Asserting that India is a socialist country with a large number of poor people, coal minister Sriprakash Jaiswal has claimed that pricing decisions of government-run companies cannot be set to secure only profits.
Speaking at the Idea Exchange organised by the Express Group on Monday, the minister said the Children’s Investment Fund (TCI) should have known this before investing in Coal India (CIL).
Jaiswal made the comments a day after TCI, the largest minority shareholder in CIL, asked its lawyers to begin legal proceedings against the public sector company for selling coal at less than the market price. TCI has claimed that this constituted a serious breach of corporate governance.
But the minister ruled out any changes in coal pricing. He said: “For a country like India where the economy is driven primarily on social agendas, there is no question of increasing coal prices to ensure profitability of a company.”
The CAG is the latest in a long line of experts who have pointed out that the low sale price of coal result in excess profit for private sector power companies who get the fuel cheap.
The coal minister also said a presidential directive will soon be issued to CIL to enter into fuel agreements with power producers who have a standing commitment from the coal company that it will supply 80% of their requirements.
TCI holds 1% stake in CIL and is the biggest stakeholder in the company after the government of India. The investor has been at loggerheads with CIL and its board members over the parity of coal prices. It has appointed its lawyers, Luthra & Luthra, to begin the process of bringing legal action against CIL and its directors.
TCI has blamed CIL for breaching fiduciary duty over the pricing. In a letter sent to the CIL board member last month, it said that coal was sold to power companies at a 70% discount to international market price despite the fact that coal prices have been de-regulated since 2000.
“Private power producers generate greater profits at the expense of people of India. Instead, CIL should be making these profits and the government of India would receive these dividends to use as it sees for for the benefit of the country,” the investor had said. The domestic coal prices range between R500 and R2,800 a tonne, while the international prices are between R2,500-R5,000 per tonne.
MENU 