Coal India ordered to sign FSAs
In a move that may not go down well with Coal India’s second largest investor after the Government of India, The Children’s Investment Fund (TCI), the government has issued the Presidential Directive to Coal India for signing of Fuel Supply Agreements, reports said. The supply aggrements will be signed to help increase electricity generation capacity and cut blackouts. The government has issued the Presidential Directive under clause 37 of MoA. Earlier reports stated that under the fuel supply agreement, Coal India would be penalised for supply below 80% of the committed quantity to local power companies and incentivised for supply of over 90% of the quantity. Coal India missed a deadline for some agreements after its board disagreed on the penalty clause linked to a minimum supply level of 80%. Coal India has been given supply obligations after production last year was less than targeted because rains stalled operations and environmental approvals for new mines were delayed.
"The directive restricts itself to the 80% trigger level and leaves other commercial matters such as the penalty clause and imports for the board to decide," reports said quoting Alok Perti, secretary at the Coal Ministry. Reports said earlier that if CIL is unable to fulfil its commitment from its own output, it will have had to arrange for supplies via imports or through arrangements with state or Central public sector units allotted coal blocks. TCI has been irked with the government and says its "recent conduct with respect to CIL has seriously impaired business activities and operations of CIL," reports said earlier. TCI’s concern also stems from the fact that Coal India supplies much of its coal under FSA’s at a discount of up to 70% of the market rates. Very recently, the fund had commenced legal action on the government over this issue and may initiate international arbitration if a settlement of its claims isn’t reached in six months, reports said. Coal India expected to sign FSA’s with power companies later this week, reports said.
Coal India targets 470 MT coal production for 2012
Another Fed stimulus less likely: FOMC minutes
The latest FOMC minutes have put paid to any hope of QE3 for the time being. Comments from the Federal Reserve policymakers suggest that they are less likely to intervene unless growth slows. According to the Fed minutes, the US central bankers generally agreed that the economic outlook, while a bit stronger overall, was broadly similar to that at the time of their January meeting. Only two of the policy-setting FOMC's 10 voting members saw the case for additional monetary stimulus. That was a big shift from January, when several Fed officials thought economic conditions might warrant a third round of bond purchases to boost growth. The Fed's assessment of the world's largest economy remained cautious as policymakers expressed concerns about a still elevated jobless rate and potential risks to the recovery from the euro area debt crisis. Fed Chairman Ben Bernanke's focus on high unemployment led investors to believe that he might be getting ready to deliver another round of monetary stimulus, known as quantitative easing, or QE3. Most Fed officials did not believe the recent uptick in US GDP growth was sufficient to materially alter their growth forecasts, the minutes said yesterday. Most of them see uncertainty prevailing over the direction of the US economy over the next few years. The Fed will update its outlook at its next meeting on April 24-25.
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