Coal India ordered to improve contract terms in online auctions

It will penalise companies that fail to buy coal on contract

Mumbai: India's antitrust regulator ordered Coal India Ltd to change the way it supplies coal through certain online auctions, ruling that the current methods were abusing the company's dominant position. The Competition Commission of India (CCI) did not fine the state-owned miner, however. Last year the regulator fined Coal India 17.7 billion rupees after finding that separate fuel supply agreements had imposed unfair conditions on customers.

In the orders unveiled on Monday, CCI said that under existing contracts Coal India and its units would penalise companies that did not end up buying contracted amounts of coal won over some of its online auctions. But the company would not assume responsibility if it failed to supply the coal on time.

That arrangement was "a result of market power exercised by Coal India and its subsidiaries", the CCI said in its statement, ruling that it amounted to "imposing unfair conditions upon the bidders". CCI thus ordered Coal India to implement a "modification of the terms and conditions" to its contracts.

Coal India holds a monopoly on commercial coal mining, accounting for more than 80 percent of India's total production.

India took a major step towards reforming its chaotic power industry last week by signalling an intent to open commercial coal mining to private companies, a measure it hopes will boost production of a raw material needed to generate three-fifths on India's power supply.

( Source : reuters )
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