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Coal India refuses to pay for supply shortfall

State-run Coal India Limited (CIL) says it will not pay the stipulated penalty to customers for failing to supply the contracted coal in 2013-14, arguing that the railways did not provide it enough rakes for coal transportation.

The miner is set to miss its supply target for the fiscal by 15-16 million tonne. This is the first full year after CILBSE -0.87 % began signing supply contracts with consumers.

"In case the railways do not provide required number of rakes, coal will be deemed supplied to the full and CIL need not pay any penalty even if the company does not end up supplying the full contracted quantity," a senior CIL executive said.

Another executive said some states are also to be blamed as they did not accept their quota of coal. "There are states which declined to take the full quota of coal due to decreased demand from the power sector," the executive said. "We won't have to pay penalties to these states. These are West Bengal, Gujarat, Rajasthan, Haryana and Madhya Pradesh."

About 12-13 power plants that have received volumes less than that stipulated in the contract agreements.

Source: The Economic Times