In January 2012, GCV based pricing mechanism which CIL had introduced in December 2011 was rolled back under the directions of MoC and CIL reverted back to the old pricing mechanism based on UHV. Following such change, TCI raised several issues with respect to the Company in relation to fairness of coal pricing, corporate governance etc. Significant among them are:
1. The sale of coal at a 70% discount to international market prices despite the deregulation resulting in a loss of US$20 billion a year.
TCI claims that sale of coal at discounted prices benefits only politically connected industrialists and not the general public. It also alleged that the government had sold shares to the Indian public and foreign investors in the IPO (in 2010) based on misrepresentation that there is an independent board and that the price of coal is deregulated according to the law that is upheld in Supreme Court rulings.
2. Pressure by the Government to sign Fuel Supply Agreements (FSAs) which obligated CIL to supply at least 80% of the contracted quantity of coal (even if it has to import coal) to the power projects, failing which it would be penalized.
3. Repeated failure of the Company to engage with TCI on various matters including the implementation of coal washing infrastructure and processes.
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Association of Certified Fraud Examiners 2012 Report to the Nations