New Delhi: The Children’s Investment Fund Management (UK) Llp (TCI), a London-based minority shareholder of Coal India Ltd, will hold talks with the coal ministry this month, suggesting that it may be prepared to relax its stand against the company. TCI has alleged mismanagement at the world’s largest coal miner.
“We talked to Mr Rao (Narsing Rao) last week and we will meet the ministry of coal this month to discuss our legal claims under BIT (bilateral investment treaty),” Oscar Veldhuijzen, partner at TCI, said in an emailed reply to questions. Rao took over as chairman of Coal India last month.
Veldhuijzen, who didn’t say what the fund’s demands would be, said TCI had not given up its plan to file a petition in an Indian court.
“I can’t reveal more details at this point in time other than that we are also preparing the legal case in the Indian courts,” he said.
The coal minister’s private secretary did not say if TCI had sought an appointment.
Law firm Luthra and Luthra has been instructed to file a petition in an Indian court against Coal India and its directors, TCI said in a press statement on 1 April.
The court case would be in addition to a notification issued to the finance secretary on 27 March on a “dispute” arising from what it alleged were violations of the UK and Cyprus treaties that deal with the mutual promotion and protection of investments.
The notification said Coal India’s strategy to under-price coal and sign fuel-supply agreements with power projects was not in the best interests of minority shareholders. Further, the government’s bid to issue coal blocks to private participants as well as create environmental hurdles to Coal India’s growth were not ideal, it said.
Although it has less than a 2% stake, TCI’s challenge has shaken the government that has usually dictated terms to Coal India in a country strapped for the fuel. It recently ordered Coal India, through a presidential directive, to sign fuel-supply agreements with power plants.
Concerns have been raised about whether foreign shareholders in state-run companies could undermine parliamentary control over such firms.
A written question in the Rajya Sabha on Tuesday asked whether the government would desist from selling shares in profit-making companies in the wake of the TCI-Coal India case.
“(The question) does not arise,” S.S. Palanimanickam, minister of state in the finance ministry, said in his written reply. “Grievances of minority shareholders are handled as per the existing legal provisions.”
Data released by Palanimanickam showed foreign shareholding in Steel Authority of India Ltd was at 4.27%, in Power Grid Corp. of India Ltd at 13.04%, in GAIL (India) Ltd at 13.44% and in Bharat Heavy Electricals Ltd at 12.9%.