Govt may issue Presidential directive to CIL on fuel issue

The government may issue Presidential direction to Coal India (CIL) next week if the PSU does not follow the PMO directive to sign with power producers fuel supply agreement, with 80% assured delivery, sources said.

The Coal Ministry has already conveyed to the CIL that it must sign the Fuel Supply Agreement (FSAs) with the power firms, notwithstanding opposition from several CIL independent directors, they said.

"The government has made its stance very clear [even though] the decision on 80% trigger is deferred for the moment," a senior Coal Ministry official said.

CIL has sought more time to work out agreement with the consumers from the power sector, while efforts are on to convince the independent directors to agree to the clause under which if supply falls below 80%, the coal producer will have to pay a penalty.

Against the backdrop of acute fuel crunch faced by power firms, the Prime Minister's Office (PMO) held recently held a meeting with representatives of the power firms. It also directed CIL to sign the FSAs with the power firms.

However, the move on assured supply has been questioned by several independent directors of CIL and a UK-based minority shareholder, TCI.

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."

The deadline set by the PMO for signing of the FSA is expiring tomorrow.