CIL dips 2% as govt directs to sign pact with power producers

Coal India is trading lower by 2% at Rs 335 after the Government directed the state-owned coal manufacturer to sign 20-year fuel supply agreements (FSAs) with power producers assuring them of at least 80% of the committed coal delivery within a week.

Analysts feel the company may stand to lose heavily in case it falters on its commitment to supply fuel to the energy firms. Currently, the company pays as penalty 10% of the average cost of the overall quantum of the shortfall on 80% of the committed Annual Contracted Quantity (ACQ).

The company board, in its meetings last week, had put a relaxation in the 10% penalty clause as a condition before the government for signing Fuel Supply Agreements (FSAs) at 80% commitment.

A combined around 350,000 shares have changed hands on the counter in opening deals on both the exchanges.