CIL rules out change in process to check quality of coal supplied

In wake of the controversy over the quality of coal supplied to NTPC, CIL refuses any changes in the supply arrangement
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First Published: Tue, Apr 09 2013. 12 16 AM IST
There is a mechanism already by which power utilities can claim discounts for impurities received by them, CIL chairman S. Narsing Rao said. Photo: Indranil Bhoumik/Mint
There is a mechanism already by which power utilities can claim discounts for impurities received by them, CIL chairman S. Narsing Rao said. Photo: Indranil Bhoumik/Mint
Updated: Tue, Apr 09 2013. 12 25 AM IST
Kolkata: In the wake of the controversy over the quality of coal supplied by it to state-owned power producer NTPC Ltd, Coal India Ltd (CIL) stuck to its guns and refused to take responsibility.
In line with long-term supply contracts, the state-owned miner appraises the quality of coal “at the point of loading” through “joint sampling” with buyers, CIL chairman S. Narsing Rao said, ruling out any change in this arrangement. The arrangement with the railways is different for imported coal, he said. Hence, power utilities can pay for imported coal based on the quality received at plants. The same arrangement isn’t possible for coal despatched by CIL, he added.
There is a mechanism already by which power utilities can claim discounts for impurities—called stones and boulders in the power industry’s parlance—received by them, Rao said. The miner reviews such claims for discounts on monthly or quarterly basis.
The maximum discount claimed by a power utility was previously capped at 0.75% of the total quantity of coal supplied, Rao said, but CIL has removed this threshold because, historically, impurities have never exceeded 0.5-0.6%.
Citing the example of NTPC’s Korba power plant, he said impurities were assessed at 691 tonnes out of 10.7 million tonnes (mt) of coal supplied to it between April and December last year. This was far lower than the threshold previously mentioned in fuel supply agreements, but even this cap has now been removed, he added.
NTPC has lately withheld payments to the monopoly miner, alleging high level of impurities, and according to CIL, the power utility owes it at least Rs.2,000 crore. CIL retaliated by suspending supplies to NTPC’s power plants, but was forced to restart despatching late last week after coal minister Sriprakash Jaiswal intervened.
As a mark of protest, NTPC had stopped deploying officials for joint sampling, but since late last week when CIL restarted supply, its officials are again turning up to appraise quality, although they aren’t signing on documents, the miner’s chairman said.
Rao didn’t acknowledge a formal dispute over NTPC’s dues and allegations of impurities, saying that the differences can be resolved through discussions.
He said his company had supplied 133 mt of coal to NTPC in fiscal 2013, 17 mt, or 14.7%, higher than the previous year. This was even higher than the 126 mt that it had committed to supply under long-term supply pacts, Rao said. “It seems our ability to supply more coal is the problem for some people,” he said.
Despite the “modest” 3.8% growth in production during fiscal 2013 to 452.19 mt, despatches increased 7.4% to 465.19 mt. It supplied 344 mt in all to power producers, triggering a 10% growth in the generation of thermal power during 2012-13.
“Truly, we have a reason to be very happy about this (coal despatches),” said Rao. “I assure that (during fiscal 2014) we shall supply coal up to the required level to all operating power utilities that have PPAs (power-purchase agreements) with discoms (distribution companies).”
NTPC decined to comment.
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First Published: Tue, Apr 09 2013. 12 16 AM IST
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