CIL appeals against CCI’s R1,773 crore penalty order

The quantum of penalty is equal to 3 per cent of the PSU’s average turnover for the last three years.

New Delhi | Published: January 10, 2014 4:45 am

Coal India has challenged Competition Commission of India’s order to penalise the company Rs 1,773 crore for abusing its dominant monopoly position. CIL has said the order needs to be stayed as it is “illogical” and cannot be accepted.
The miner has filed an appeal before the Competition Appellate Tribunal which is to be heard on January 13. The appeal says that the fair trade regulator (in its order on December 9) has failed to appreciate its constraints and instead held it accountable for compelling its buyers to pay for the freight of ungraded coal.
According to the CCI, “Coal India abused its dominance and did not try to evolve/draft/finalise terms and conditions of FSAs (fuel supply agreements) through a mutual bilateral process with procurers. … the same were sought to be imposed upon the buyers without seeking, much less considering, the inputs of the power producers,” it had said.
Touching upon a host of issues related to coal supplies, including sampling and testing procedures, the regulator had also ordered Coal India to modify FSAs after consulting stakeholders.
Talking to The Indian Express, a senior Coal India Ltd official said under the erstwhile Useful Heat Value formula, the company had graded its fuel from A to G range and any coal below these grades were generally treated as ungraded fuel. As per the provisions of the FSAs in 2009, the PSU used to charge only Re 1 per tonne of such coal and there have been no complaints from any of its buyers hitherto.
“Please understand that we used to charge a nominal Re 1 for ungraded coal, which we had to do as there has to be a minimum billing. Every year we load about 7,000-8,000 rakes and have not received cognizable complaints so far. How have we fleeced out customers? The order is illogical,” the official said.
The CIL board, in its last board meeting, had observed that the CCI failed to appreciate that CIL does not enjoy any commercial freedom in deciding its customers as well as the quantity of fuel supply.
“While being considerably bound by the directives of the coal, power and railway ministries, it has also been give directives by the Planning Commission from time to time, the official said .
Following due diligence on complaints from Mahagenco and Gujarat State Electricity Corporation, the CCI in its order had said that CIL is operating independently of market forces and enjoys an undisputed dominance in the country over production and supply of non-coking coal.
The quantum of penalty is equal to 3 per cent of the PSU’s average turnover for the last three years.
On the issue of capping the compensation for its customers for getting stones along with coal, the company official contended the in the FSAs it is clearly enshrined that as and when the buyers get stones, they inform the PSU and following a corroborative check, the buyers are compensated within two months. In the past the compensation never crossed 0.2-0.3 per cent of stones.

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