Coal India Penalized For Supply Shortfall

Reuters reported that Coal India was penalized for providing insufficient supplies, from 1.5 to 40 percent of a shortfall, after the state miner agreed to supply a minimum of 80 percent of the coal needed to fuel 48 new power projects.

As quoted in the report:

On Tuesday, the Coal India board agreed to pay a 1.5 percent penalty if its supplies amount to 65 to 80 percent of the contracted volume and 5 percent if they reach 60 to 65 percent, its chairman told reporters after the board meeting.Penalties would rise to 10 percent for 55 to 60 percent, 20 percent for 50 to 55 percent and a maximum of 40 percent for supplies of less than 50 percent of contracted volumes.

Murtuza Arsiwalla, a sector analyst with Kotak Securities, commented:

It’s not very ominous. Obviously, it’s more than they initially wanted, but we should also factor in that they are allowed to import coal to make up shortfall.

Click here to read the full Reuters report.