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Private power producers take Coal India to CCI

November 07, 2012 13:49 IST

The private power producers' lobby has taken state-run Coal India Ltd (CIL) to the Competition Commission of India (CCI) over the long-standing issue of fuel supply pacts.

The lobby has blamed CIL of discrimination in favour of public sector companies in the reworked format of the fuel supply agreements (FSAs).

The new allegations are centred on the right to terminate supplies, then security deposit and the mechanism for settlement of disputes between supplier and buyer.

The Association of Power Producers (APP) have questioned the basis of having different FSAs for independent power producers (IPPs) and public sector companies.

"The discrimination has no precedents," APP Director General Ashok Khurana wrote in letters to the coal and power ministries.

"Before 2009, the FSA for public and private sector generating stations were the same. Introducing the concept of differential FSAs now is contrary to the principles of natural justice and equality of treatment. This would not stand scrutiny of law."

Khurana said he had taken up the discrimination matter with CCI, as part of APP's comments, which the anti-competition watchdog sought over an ongoing matter where the competition panel is investigating the alleged abuse of market dominance by Coal India.

Earlier this year, Maharashtra State Power Generation Company (Mahagenco) had complained against CIL and its subsidiaries, Mahanadi Coalfields and Western Coalfields, for alleged abuse of their dominant positions.

APP has alleged that in the FSA format with IPPs, Coal India enjoys unilateral right to terminate supplies in the event of non-consensus during a review after five years of supply.

The same clause in the FSA with public firms provides for referring the matter to the Centre. APP also says the provision on a security deposit has been loaded against IPPs in the new FSAs.

While IPPs are required to file fresh security deposits, public sector firms can adjust the already deposited commitment guarantees against security deposits.

Sudheer Pal Singh in New Delhi
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