Coal India slapped with Rs 591 crore fine for unfair conditions in fuel supply agreements

The penalty amount of Rs 591.01 crore translates to one per cent of Coal India's average turnover for the three-year period from 2009-10 to 2011-12.

By: PTI | New Delhi | Published:March 24, 2017 6:20 pm
Coal India, Coal India Competition Commission, Competition Commission fines Coal India, Coal India 500 crore fine, Coal India fuel agreements, CCI Coal India fine, Coal India penalty, Business news Coal India logo. (File Photo)

The Competition Commission Friday slapped a fine of Rs 591 crore on state-owned Coal India for having unfair conditions in fuel supply agreements. Besides, the fair trade regulator has directed the coal behemoth to “cease and desist” from anti-competitive practices. On earlier occasions also, Coal India has come under the lens of the Competition Commission of India (CCI).

In a 56-page order, the watchdog has found the company violating competition norms by “imposing unfair/discriminatory conditions in the matter of supply of non-coking coal to power producers”.

Further, CCI said that Coal India did not “evolve/ draft/finalise the terms and conditions of FSAs (Fuel Supply Agreements) through a mutual bilateral process and the same were imposed upon the buyers through a unilateral conduct”.

The penalty amount of Rs 591.01 crore translates to one per cent of Coal India’s average turnover for the three-year period from 2009-10 to 2011-12.

Asking the company to modify the fuel supply agreements, the regulator said it should be ensured that there is uniformity between old and new power producers as well as between private and PSU power producers.

“Specifically, Coal India Ltd is directed to incorporate suitable modifications in the fuel supply agreements to provide for a fair and equitable sampling and testing procedure,” the order said.

Further, the regulator has suggested that the company consider the feasibility of sampling at the unloading-end in consultation with power producers besides adopting international best practices.

The latest ruling has come on complaints filed against Coal India and its three subsidiaries — Mahanadi Coalfields, South Eastern Coalfields and Western Coalfields. They were filed by Maharashtra State Power Generation Company and Gujarat State Electricity Corporation.

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