Addl levy on Rajmahal coal to spark new CIL-NTPC feud

Written by Indronil Roychowdhury | Kolkata | Updated: May 31 2013, 05:52am hrs
With Coal India (CIL) fixing a special support price for coal from the Rajmahal mines a captive source of the fuel for

NTPC the state-run utility will have to pay about twice the hike in prices for supplies to its Farakka and Kahalgaon plants.

Rajmahal mines, under Eastern Coalfields (ECL), has reserves of G-10 to G-13 coal grades with calorific value ranging from 4,300 kcal/kg to 3,400 kcal/kg. While the price of the G-10 grade has been increased 34.85% from R860 to R1,160 per tonne, that of the G-11 grade has been upped 35% from R700 to R950 per tonne. Prices of G-12 and G13 grades have been increased 43.93% from R660 to R890 and 34.32% from R610 to R820 per tonne respectively, but CIL has imposed a special support price of R300 per tonne over and above the increase.

NTPC has already opposed pricing based on gross calorific value (GCV), and has balked at paying the balance of the increase due to the shift from useful heat value (UHV) based pricing.

CIL director (finance) A Chatterjee said NTPCs dues to the coal miner as of March 31, 2013 stood at R4,163.61 crore, of which dues to ECL were R1,100 crore.

The dues to ECL have mounted mainly because NTPC denied paying the average notified price of R840 per tonne for Rajmahal coal citing quality issues, and paid only R360 per tonne on the basis of an agreement with the Union power ministry. With the state-run miner increasing the price of Rajmahal coal over and above the notified price, and thereafter putting a special support price tag on it, CIL officials feel this would lead to another controversy with NTPC.

CIL chairman S Narsing Rao said, We will have to wait and see what happens. However, NTPCs official spokesperson said the new price of the Rajmahal coal would actually compensate CILs losses, which occurred due to a reduction in earlier notified prices.

Earlier, CIL reduced the notified price of Rajmahal coal and now they have increased it, the NTPC spokesperson said.

ECL, under the annual contract quantity (ACQ), would supply 13.5 million tonne to NTPCs Farakka and Kahalgaon plants in FY14. To transport this coal, NTPC has created its own dedicated railway infrastructure up to its two plants at distances of 65 km and 29 km, respectively.

According to an ECL official, NTPC seems to have agreed to the new prices as its quality complaint didnt stand the rigour of third-party sampling that started a couple of months ago. NTPC forced a reduction in average notified prices from R840 per tonne to R360 per tonne raising quality issues, but after Central Mining and Fuel Research Institute started third-party sampling, quality issues have been sorted out.

The NTPC spokesperson said the coal price increase would have a nominal impact and it would be passed on to consumers through variable cost adjustment.

ECLs technical secretary Niladri Roy said the hike would help ECL to come out of Board for Industrial and Financial Reconstruction (BIFR), offsetting its accumulated losses. ECL as on March 31, 2013 had accumulated losses of R3,291 crore, down from R8,000 crore in 1999, when it was referred to BIFR.