Post the CCI decision, Khurana is hopeful that the company will re-draft the agreement and make it more equitable and ensure greater transparency. "The Minister of Power has assured us that all the FSAs would be aligned to the PSUs. It has not been done till date; now with this order backing, at least Coal India will revise all the FSAs and will treat all the customers at par," he said.
Below is the edited transcript of Ashok Khurana's interview with CNBC-TV18
Q: Could you tell us what exactly were the problems that power companies were facing and what is the first reaction to the CCI's order?
A: We welcome this imposition of penalty because for last five to seven years Coal India has been abusing its monopoly position. The fuel supply agreements (FSAs) are one sided and inequitable. Their policy has been on the quantity and the quality take it or leave it because there is no other place to go. The CCI has now clearly said that there should be grading and sampling and Coal India after the NTPC fight had also agreed for a third party inspection.
Coal India's FSAs are unbankable, inequitable and completely imbalanced. It favours Coal India only. Therefore this decision will actually make Coal India re-draft the agreement, make it more equitable and at least provide the quantity and quality as specified in the FSA. Many a times, they specify X grade and they supply X minus one, X minus two grade and charge for the higher GTV over there. You can't appeal to anyone.
Q: You mentioned that this will prompt Coal India to redraft the agreement. What are the changes you will seek? We understand transportation, other expenses all of this could be renegotiated? Could that be brought back to the table now?
A: With Coal India there is no question of renegotiation. Atleast there should be transparency. There is no transparency as far as the breakup of these provisions is concerned. There is complete opacity of pricing in Coal India today.
This decision will actually bring about some transparency. The CCI has clearly said about grading and sampling that means there will be third party inspection. They have to supply coal according to what they are charging us. So, it will not be take it or leave it situation. Atleast now the procurers post this decision will have some backing of CCI to ask questions from a monopoly supplier.
Q: The CCI order says that it is directed Coal India (CIL) to ensure parity between old and new power producers as well as private and PSU power producers as far as practicable, do you see that happening and if so what do you expect?
A: We have been fighting for it. The Minister of Power has assured us that all the FSAs would be aligned to the PSUs. It has not been done till date; now with this order backing, at least Coal India will revise all the FSA and will treat all the customers at par.
Q: Do you expect things now to change on the ground after this fine is paid? As you said you are not hoping for renegotiation with Coal India but atleast more transparency, do you see that happening?
A: We hope so because Coal India cannot refuse everyone. They refused NTPC first. If they don't do it we will go back to CCI.
Coal India stock price
On December 10, 2013, Coal India closed at Rs 285.45, down Rs 4.95, or 1.7 percent. The 52-week high of the share was Rs 372.10 and the 52-week low was Rs 238.35.
The company's trailing 12-month (TTM) EPS was at Rs 13.90 per share as per the quarter ended September 2013. The stock's price-to-earnings (P/E) ratio was 20.54. The latest book value of the company is Rs 32.48 per share. At current value, the price-to-book value of the company is 8.79.
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