The country’s largest power producer and coal consumer, NTPC has an annual coal requirement of 160 million tonnes (mt), of which it will have to import around 16 mt. (The country’s largest power producer and coal consumer, NTPC has an annual coal requirement of 160 million tonnes (mt), of which it will have to import around 16 mt.)
The country’s largest power producer and coal consumer, NTPC has an annual coal requirement of 160 million tonnes (mt), of which it will have to import around 16 mt.
(The country’s largest power producer and coal consumer, NTPC has an annual coal requirement of 160 million tonnes (mt), of which it will have to import around 16 mt.)

NTPC-CIL fuel supply agreement stuck on calorific value

NTPC wants coal of calorific value not less than 3,100 kcal, while CIL wants to supply coal of different grades

New Delhi: The much-awaited signing of fuel-supply agreements (FSA) between state-run firms NTPC Ltd and Coal India Ltd (CIL) may be further delayed due to divergence on the issue of coal’s calorific value.

While India’s largest power generation utility wants coal not having less than 3,100 kilocalories (kcal) of calorific value supplied to its plants, Coal India, the world’s biggest coal miner, wants to supply coal of different grades to NTPC up to a calorific value of 1,900 kcal.

Coal with a higher calorific value reduces wastage and improves generation efficiency. NTPC is yet to sign FSAs for coal-fired power generation capacity scheduled to come onstream in 2013.

“Most of the issues have been resolved. The only issue left is of the calorific value," said Arup Roy Choudhury, chairman and managing director of NTPC. “We don’t want anything less than a calorific value of 3,100 kcal. CIL wants to supply up to 1,900 kcal. This has to be resolved. We are ready to sign."

The calorific value of coal has an impact on boilers, said another NTPC executive requesting anonymity. “Our plants will not work on coal having less calorific value. Coal’s calorific value is linked to boiler heat transfer rate," this person said.

Coal India has shifted to a new pricing mechanism based on gross calorific value, under which prices are linked to the calorific value, or quality, of coal. This comes in the backdrop of NTPC deducting money from the fuel bills raised by the coal miner on grounds that it has been supplied low-grade coal.

CIL chairman S. Narsing Rao said NTPC had written to the company demanding that the minimum calorific value should be 3,300 kcal.

“But that is not practical. I can only give you that quality of coal which is available under the ground," he said. “Having said that, if any consumer wants coal that is of a higher calorific value, I am willing to wash it. But since setting up washeries would require capital expenditure, the consumer would need to give us an undertaking that they would procure a minimum amount of coal from us. They would also have to give us at least two years to set up the washeries and specify locations where they want the same to be set up."

The FSAs have been pending over the differences between the two public sector companies over the terms and conditions, particularly on penalties and import of coal. A pact between NTPC and Coal India on fuel supply that lapsed in December has been extended till March.

Jyotiraditya Scindia, minister of state for power with independent charge, told reporters at a press briefing on Tuesday that difficult and discriminatory FSA clauses have been resolved and agreements for 21,000 megawatts (MW) had been signed. He expressed hope that NTPC would sign FSAs for 14,000 MW shortly.

NTPC is capable of generating 39,674 MW 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 tonnes (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.

Coal India produced only 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.

aman.m@livemint.com

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