Coal India's (CIL) board today approved signing of the agreements with the power producers before April 20 for minimum assured supply of the fuel, following a directive from the government.
Failure to supply at least 80% of the committed quantity to the power firms would attract a penalty of 0.01%.
"[The board] agreed upon the Fuel Supply Agreement [FSA] document and it will be signed within 15 days from the [date of] government directive," CIL acting Chairperson and Managing Director Zohra Chatterji said after the meeting of the board of directors here.
The Maharatna firm's board met for the first time after a Presidential directive was issued to the PSU in which the government holds 90% of the shares. Chatterji said the penalty clause would be operational only from third year of the agreement.
"The board also decided that the penalty would be 0.01%. It [penalty clause] would be operational after three years," she said, ruling out there would be any diversion of coal from the PSU's e-auction quota.
"E-auction will continue at the present level," she said. When asked upon the quantity of coal the PSU would import, she said, "It will be decided later."
The government issued a directive on April 3 to CIL to commit a minimum of 80% of fuel supply to power producers, with a penalty clause. The directive was issued following a meeting between the power sector honchos and the Prime Minister's Office.
Independent directors had objected to any government direction to CIL, which is listed on the stock exchanges. UK-based hedge fund, the TCI, a minority shareholder in CIL, has threatened a legal action against the FSA move.
