New Delhi: Brushing aside criticism that it is running Coal India (CIL) with a diktat, the government on Wednesday asserted that it cannot leave the PSU's functioning to market and minority shareholders.
"Whosoever bought Coal India shares, knew it well that it is a government company and that our government is committed to follow a socialist path. If someone had bought the Coal India shares thinking the company will run the way they want or the way the market wants, it is not possible," Coal Minister Sriprakash Jaiswal told.
The government yesterday issued a Presidential direction to the company to sign fuel supply agreements (FSAs) with power producers assuring them a minimum of 80 percent of the delivery committed. Ninety per cent of the shareholding of the market-listed company vests with the President of India.
Any shortfall in commitment by the Rs 50,000 crore company will attract penalty which may run into over Rs 100 crore, analysts said. The move follows a Prime Minister's Office directive after it held meetings with power firms' honchos including Ratan Tata, Anil Ambani and Gautam Adani on fuel shortages hitting the sector in January and February.
Several independent directors and at least one of the leading minority shareholders, TCI of UK have questioned the move. TCI has threatened legal action against the company.
According to Coal India acting Chairperson Zohra Chatterji, the fuel pacts with the power companies would be signed "as soon as possible".
Meanwhile, Coal India which had fallen by over two percent in the morning trade, recovered losing marginally at close by 0.34 percent at Rs 341.60. However, prices of power scrips, improved despite overall decline in the market.
In another key development, the government has cleared name of Singareni Collieries Chairman and Managing Director S S Narsing Rao as the new head of Coal India. The company did not have a regular head for the last one year.