Presidential raj

The government’s stance on the dispute with The Children’s Investment (TCI) Fund gets curiouser and curiouser. The presidential directive telling Coal India Limited (CIL) it has to sign fuel supply agreements (FSAs) with power plants even if its board disagrees with this is only going to make TCI’s case stronger at the arbitration court. Given how CIL’s FY12 production has fallen short of even the lowered target, clearly CIL’s board was right in arguing CIL doesn’t have the capacity to meet the FSAs, and the penalty clauses for non-supply will be huge. This is, in fact, the crux of the TCI argument, that the government is forcing CIL to take commercially unsound decisions—forcing CIL to disregard its board proves just this.

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