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Web Exclusive | October 2012

CIL asked to pay power producers over short supply

The Union Power Ministry Secretary P Uma Shankar has demanded that Coal India (CIL) should pay compensation for the losses of power firms as the CIL is unable to cater to the power producers.

In a September 26 letter to Coal Secretary SK Srivastava, Power Secretary P Uma Shankar has blamed CIL for hurting power sector investments as financial institutions had been shaken by the coal shortages. Shankar’s views follow a move by CIL’s independent directors to block the import of coal and their sale at a discount to power producers as suggested by the Central Electricity Authority.

Power producers had made investments after coal supplies were approved by the Coal Ministry and assurance letters issued by CIL, Shankar wrote in his letter.

He said in the letter that CIL has failed to honour its binding obligation, thus leaving such assets stranded, threatening not only their viability, but likely to make them non-performing assets. Shankar has also slammed the CIL board for rejecting the suggestion to import coal.

CIL board and its director will do a great service to the nation if they do some soul searching on their responsibility and their commitment to increase production of domestic coal and ensure adequate supply of coal to help the growth of the country and not expose power and banking sectors to the risk of jeopardising all their investments, which is largely public money, he said.

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