Penalty if CIL fails to supply coal to consumer
NEW DELHI: In a first such instance, state-owned Coal India Limited (CIL) will be liable to pay a penalty if it fails to supply coal to consumers through e-auction. Until now, only buyers faced penalties for not lifting the full quantity bid for.
The move aims to increase CIL’s supply and maintain its market relevance. Currently, CIL is the sole supplier of coal via e-auction and the provision of penalty would now be part of the e-auction contracts of Coal India going ahead.
“The move is to make the contract equitable and fair. Earlier, there was no penalty on CIL, if CIL failed to supply coal to the consumer. It used to forfeit the security deposit of consumers, if the consumer failed to lift successful bid quantity of e-auction,” said a senior official of the coal ministry.
These measures aim to boost CIL’s supply and maintain market relevance amid rising competition from commercial mining and private players. Phasing out of coal from certain sectors is driving CIL to prioritise supply. Reports suggest demand for CIL’s coal could drop by up to 58% in next two years.
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