State-controlled producer Coal India (CIL) has received yet another censure from the country's competition regulator after customer complaints about its monopolistic practices.
The Competition Commission of India (CCI) warned CIL in a judgement this week against unfair trade practices — although it stopped short of imposing a fine. Both cases, filed last year, related to online coal auctions and fuel supply agreements.
CIL had been accused of imposing unfair conditions on bidders under its spot e-auction scheme, where it sells coal at market rates — in contrast to most of its 462mn t/yr of output which is sold at state-set prices under term sales agreements. CIL does not pay any compensation for non-delivery of the fuel, while the buyer has to forfeit a deposit of 500 rupees/t ($8/t) if it fails to lift the coal, complainant Bijay Poddar argued.
A similar case was filed by utility Sai Wardha Power against CIL and its affiliate Western Coalfields, complaining about unfair conditions imposed in fuel supply agreements.
The CCI found CIL, which accounts for 80pc of the country's coal output, abused its dominant position in the market and ordered it to stop such activity. It also ordered CIL to modify the terms and conditions of its e-auction scheme.
CIL is currently appealing a Rs17bn fine levied by the CCI last year for abusing its market dominance, after imposing onerous and unfair conditions in its fuel supply agreements and discriminating against non-state buyers. The company is refusing to pay penalties to state-owned utilities in earlier cases involving West Bengal, Gujarat, Rajasthan, Haryana and Madhya Pradesh.
CIL's biggest customer, state-controlled utility NTPC, last year held back payment of Rs10bn in a dispute over coal quality. CIL eventually agreed to jointly inspect and test coal to calculate the energy content it uses to bill NTPC. The mining firm had previously resisted any such quality checks, despite its consumers complaining that the gross calorific value of its coal deliveries was less than a third of what was promised.
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