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Coal's Labour Lost

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Two weeks after it threatened to sue the Coal India board, minority shareholder London-based hedge fund, The Children's Investment Fund (TCI), accused it of not performing adequately and harming the company. The public sector undertaking, on its part said the allegation "does not merit comments". The battle of words between TCI and the PSU is set to become a direct battle with the government and could cause damage to the foreign investment climate in India

Saying it was unhappy with the company's response, TCI has written to coal secretary Alok Perti to change the top management of CIL, saying the company "lacked necessary leadership to develop operationally".

When asked about TCI's charge, Perti has reportedly remarked that if it is unhappy, it should sell its stake.

In a letter to the Coal Ministry, the hedge fund, which is a minority shareholder, has alleged that "Coal India's board and top management are not performing adequately and are harming the company".

When contacted, acting Chairman and Managing Director of Coal India Zohra Chatterji said such allegations "do not merit comments".

Attacking the Coal India management for poor performance of the company, the London-headquartered fund said, it "lacked the necessary leadership..." and demanded that the board and management to be "swiftly changed."

It also alleged that the government had "sold shares to the Indian public and foreign investors at the IPO (in 2010) based on misrepresentation that there is an independent board and that the price of coal is deregulated according to the law that is upheld in Supreme Court rulings."

The letter further said that "if this abuse of minority shareholder is not ceased, India's current perception as a country that is a bad place for foreigners and domestic investors due to relentless government interference and regulations will be cemented into reality.

"This will severely jeopardise much needed investment into critical infrastructure this nation requires", it added.

The fund had earlier threatened to take legal action against the Coal India board for its failure to protect the interest of minority shareholders.

In the letter, TCI had alleged that Coal India reversed a decision to raise coal prices on instructions from the government. TCI had obtained a letter written by the coal secretary to NC Jha, the then chairman of CIL, through the Right to Information (RTI) Act.

The government had asked Coal India to sign FSAs at trigger level of 80 per cent and the Coal India board is scheduled to meet again on March 28 to take a call on the issue.

Coal India was granted Maharatna status in April 2011. Being a Maharatna company, Coal India management can take decisions on investments amounting to Rs 5,000 crore without consulting government. This new status will also help the company to easily take decisions on investments in foreign projects on its own.

Moreover, in cases relating to acquisition of other companies, the management of Coal India can take a decision without any government interference. 

Govt To Soon Come Out With Coal Regulatory Bill
Facing heat over a draft report of the CAG over allocation of coal blocks, the Coal Ministry has said it will soon come out with a Coal Regulatory Bill, 2012, that will improve transparency in the sector.

"I have already signed (the draft Coal Regulatory Bill) and it has been sent to the Cabinet (for approval)," Coal Minister Sriprakash Jaiswal told PTI.

The bill seeks to provide level-playing field to all stake holders, besides ensuring transparency in allocation of coal blocks to companies.

The coal sector regulator, as provided in the Bill, will attempt to expedite resolution of disputes relating to pricing of coal and put in place benchmarks for performance of companies in the sector.

The Coal Ministry has been in the news following disclosure of a draft report of the Comptroller and Auditor General (CAG) which had pointed out that the government lost Rs 10.67 lakh crore on account of allotment of coal blocks to 100 private and public sector companies during 2004 to 2009.

While replying to the questions in the Lok Sabha on March 14, Jaiswal had said coal sector would soon get a regulator as the government has finalised a draft bill for the purpose.

Coal Ministry To Issue Notices To Firms Sitting Idle On Mines
Amid furore over the CAG draft report estimating Rs 10.67 lakh crore losses to the exchequer on account of coal mines allocation, the government will begin issuing notices from tomorrow to firms sitting idle on blocks.

"We will begin the process of issuing show cause notices to around 58 block holders, including, NTPC, SAIL, Jindal Steel & Power and GVK Power, that were allocated mines for captive use from tomorrow," a top official in the Coal Ministry told PTI.

The development follows reports that an initial draft by the Comptroller and Auditor General (CAG) has estimated a loss of Rs 10.67 lakh crore loss to the exchequer on account of allotment of coal blocks to 100 private and public sector companies during 2004 to 2009.

The decision to issue show-cause notices to the firms sitting idle on captive coal blocks was taken by a panel looking into the development of reserves, sources said.

Concerned over the increasing demand supply gap, the Ministry in January this year had reviewed the progress of mines allocated to companies, including Tata Steel, Coal India, SAIL and NTPC for captive use.

(With Agencies)