New Delhi: The differences between state-run firms NTPC Ltd and Coal India Ltd are turning nastier, with the power utility now charging the miner of inflating fuel bills by an estimated Rs.350 crore for this financial year.
The utility said it will pass on this additional cost to its customers, potentially increasing power tariffs.
“While we are being supplied coal having a calorific value of 3,500 kilocalorie per kg, we are being billed for 4,500 kilocalorie per kg to 5,000 kilocalorie per kg,” an executive at the utility said, requesting anonymity. “This has been on for some time and the issue has been taken up at the topmost levels in the ministries of coal and power. We have calculated a loss of Rs.350 crore on this count for this year.”
Coal India chairman S. Narsing Rao declined to comment on the matter.
“We are trying to resolve and reconcile the issue by testing (coal quality) at our stations,” said Arup Roy Choudhury, chairman and managing director of NTPC.
This comes in the backdrop of differences between the two public sector enterprises over the terms and conditions of fuel supply agreements, particularly on penalties and import of coal.
NTPC is yet to sign this pact for around 10,005 megawatts (MW) of coal-fired power generation capacity scheduled to come on stream in 2013.
NTPC has lodged a protest with the government and accused Coal India of billing for one grade of coal and supplying a different grade, The Indian Express reported on Friday. Rao termed the allegations as “incorrect” and “devoid of facts”, the newspaper said in its report.
NTPC is capable of generating 39,674MW of electricity with 16 coal-fuelled projects. The country’s largest power producer and coal consumer, NTPC has an annual coal requirement of 160 million tones (mt), of which it will have to import around 16 mt. The balance comes from supplies from miners such as Coal India and Singareni Collieries Co. Ltd.
“This problem has cropped up only after the introduction of new billing mechanism on gross calorific value (GCV). If this anomaly on the part of Coal India is not corrected, the problem will only worsen,” the unnamed NTPC executive said. “This Rs.350 crore loss is not ours but (of) the states who buy power from us and eventually (of) the customers as fuel is a pass-through.”
Coal India shifted to a new pricing mechanism based on GCV at the beginning of the year. Under this system, prices were linked to the actual calorific value, or quality, of coal.
The world’s biggest coal miner produced 431 mt in 2010-11 against a target of 461.5 mt because of stalled projects. It failed to meet its 2011-12 target of 440 mt as well, mining 435.84 mt, but has set a target of producing 468.74 mt in 2012-13 amid land and environment-related hurdles and is under pressure from power companies for more supplies.
India has a power generation capacity of 205,340.26MW, of which 56.7% is coal-based. With more than half of the country’s total power generation based on coal, the power sector is the major consumer of the fossil fuel, absorbing nearly 78% of total domestic production.
Coal demand is expected to grow from 649 mt per annum (mtpa) to 730 mtpa in 2016-17, with the projected local availability at 550 mtpa in that year. India has a known gross resource base of 264,000 mt of coal, the fourth largest in the world, of which proven reserves are around 101,000 mt