A day after the Presidential directive was issued to Coal India Ltd for signing fuel supply agreements (FSAs) with power firms, the company today said the pacts are being vetted by its legal team and will be signed at the earliest.
"FSA documents have been discussed in the (company) Board. It is under legal vetting, will be placed before the Board again and then it will be signed," Coal India's acting Chairperson Zohra Chatterji told reporters here.
When asked for a particular time-line for signing the agreements, she just said, "As soon as possible".
Yesterday, Coal Minister Sriprakash Jaiswal had said the agreements will be signed in a day or two, following the Presidential directive to the company.
As per the directive issued yesterday, the company has been asked by its largest shareholder and promoter (in this case, Government of India) to commit fuel supplies to the power firms within a week.
With the move, the government made its intention clear that at least 80% of the committed coal delivery to the power sector has to be ensured by Coal India and that too for 20 years (the total duration of the FSA).
However, the crucial clause of penalty on Coal India, if it fails to meet the targeted supply, has been left to the company board, Jaiswal had said yesterday.
"It is for Coal India to decide (penalty).They have full freedom (on it)," he had said.
The unprecedented move of issuing the Presidential directive was taken by the government after Coal India Board failed to reach consensus and did not meet the deadline of March 31, set by the Prime Minister's Office, to enter into agreements with power producers which were facing fuel crunch.
It was perhaps only the second time that the government has resorted to this option to force a large and profit making PSU to abide by its directive.
The company, also the largest coal producer of the world, has not signed FSAs with the power producers since 2009 and pays 10% penalty on average cost of overall shortfall.
The shortfall is calculated, while taking 80% of the committed quantity, called Annual Contracted Quantity (ACQ) as base.
In 2010-11, the company had posted a net profit of Rs 10,867.35crore, while its net sales were Rs 50,233.59 crore. For the October-December quarter of 2011, it had reported a net profit of Rs 4,037.76 crore and net sales of Rs 15,349.28 crore.
Shares of the company, which were down by more than 2% in the morning trade, recovered some of the losses later and closed at Rs 341.60 apiece on the BSE, down 0.34% from the previous close.
