FSAs for coal benefit neither Coal India nor public: TCI
In a detailed presentation, ‘Cheap Coal Does Not Benefit The Indian People’ TCI said that 80 per cent of CIL’s coal is sold under FSAs at discounts up to 70 per cent to landed cost of comparative imported coal.
TCI has estimated that if CIL sells its FSA coal at market price levels then its profits will increase by $19 billion (Rs 95,000 crore).
“Government of India forces this system on CIL by arguing that it keeps steel, cement and power prices low for the benefit of all Indian people. However, often the benefits of artificially low coal prices are not passed on to the end consumers and some power companies keep the FSA benefits to themselves as they sell power under merchant power tariffs,” TCI said.
The London-based hedge fund that owned 1.01 per cent in CIL (as on March 31, 2012) has been writing to the company not to follow government instructions but to act independently and recognise that selling coal cheap and entering into prejudicial fuel supply agreements cannot benefit the public.
It said in the presentation that there is significant demand for FSAs coal as huge profits are available to companies buying discounted coal and added that there
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