After lying low for a few weeks, The Children?s Investment Fund (TCI) has fired a fresh salvo at the Indian government, effectively setting a six-month deadline to act upon the allegations put forth by the foreign institutional investor in the matter of Coal India (CIL).
In its latest letter, TCI ? which holds a little over 1% in Coal India ? has asked the Indian authorities to come forward for ?formal negotiations? for an ?amicable settlement? of the issues that have been raised by the former on numerous occasions. Meanwhile, reports suggest that the coal ministry officials are not keen on meeting with representatives of TCI who had sought a meeting on May 29.
Further, TCI has categorically said that the letter is a notice under the agreement signed between India and Cyprus in 2002 for mutual promotion and protection of investments and further action will be taken if the government fails to act within six months.
?For the avoidance of doubt, this letter is written notification of TCI Cyprus’ claim under Article 9 of the (India-Cyprus) Treaty,? says the three-page letter written on May 16.
?We, therefore, request that the government of the Republic of India enter into formal negotiations with TCI on behalf of TCI Cyprus seeking amicable settlement of these claims under the Treaty… Failing such settlements within six months, we reserve our rights to initiate arbitration in accordance with Article 9 of the Treaty,? it adds.
The letter has once again alleged that while the board of Coal India failed in its fiduciary duties, the government is forcing the board to abuse minority shareholders with illegal price controls. ?The Republic of India’s recent conduct with respect to CIL has seriously impaired the business activities and operations of CIL and has contravened the Treaty,? says the letter.
TCI has alleged that it was wrong on part of the government to direct CIL to sell coal under Fuel Supply Agreements (FSA) at a discount of up to 70% compared to the international prices. Further, TCI has raised a red flag over the government decision of directing CIL to enter into additional FSAs with power companies wherein CIL will have to unconditionally guarantee supplies or face severe financial penalties.
?TCI Cyprus fully reserves all of its rights against India, including the right to claim compensation for the harm caused to its investments by these violations, both under the Treaty and any other applicable instrument,? says TCI.
The foreign investor has already written many letters to the board of directors of CIL and the secretary of the ministry of coal, alleging that while the board failed in its fiduciary duties, the government is forcing the board to abuse minority shareholders with illegal price controls.
On Monday, shares of Coal India gained 2.41% or R7.30 to end the day at R310.45.