Says it supplies cheapest coal in the world, accuses power major of failing to clear dues

Coal india (CIL) has hit out at NTPC for questioning the quality of coal supplied by it. CIL chairman S Narsing Rao told FE that the coal that CIL subsidiary Eastern Coalfields (ECL) supplied to NTPC had 35% ash content, with calorific value ranging between 3,000 kilo calorie/kg and 3,600 kilo calorie/ kg. NTPC gets the coal at R710 per tonne, down from R910 a tonne two years back, when coal pricing was decided on the basis of UHV.

?NTPC gets coal at $13 per tonne, the cheapest in the world, and it costs less than sand. What more can one expect at this price?? said Rao.

CIL supplies to NTPC?s plants at Kahalgaon, Farakka, Badarpur and Tanda increased 32% in the last two years, while dues from NTPC rose 476.5% between FY11 and FY 13. Rao said there was a protocol of joint sampling at the loading point, but NTPC had stopped participating in it.?

The power major has complained that the coal supplied by ECL was full of boulders and stone. ?The railways carries the coal and CIL can?t take responsibility for its quality after it is dispatched. ?How can one ask CIL to ensure quality at the unloading point, when carrying it is not its responsibility?? asked Rao.

NTPC has been buying the same coal for years, but, suddenly, it finds that the quality doesn?t suit its boilers, Rao said. ??I don?t understand the logic of NTPC?s allegation,? he said, adding that CIL has been supplying more than its demand, but NTPC has not been making timely payments.

?There were letters after letters from ECL, asking NTPC to clear its dues, but NTPC never bothered to give a reply,? Rao said. ?

ECL director (technical) Subrata Chakraborty said NTPC placed a demand of 12.2-MT coal in FY 11 for its Farakka, Kahalgoan, Badarpur and Tanda units, but CIL supplied it 14.5 mt. In FY 12, NTPC placed a demand 13.2 mt for its four power plants, but, again, CIL supplied 14 mt.

However, in FY13, ECL?s supplies were 0.7 mt less than the demand and the power major made an issue out of it, he said. While NTPC demanded 19.9 mt, CIL supplied 19.2 mt. NTPC owed ECL R173.45 crore in FY11, which rose to R426 crore in FY 12. At the end of FY13, NTPC?s dues to ECL stood at R999.19 crore and that?s when the coal company thought of halting supplies to the power major, he said.

Rao said NTPC?s total due to CIL as of March 31, 2013, were R2,200 crore. ??

Supplies to NTPC?s four power plants stopped from April 1-4, but from April 5, the CIL subsidiary resumed supplies. ?We resumed supplies on a verbal commitment that the power major would pay R150 crore of its total dues,? a CIL official said, adding that ECL supplied an average of 20 rakes a day to the four power plants, but now it has resumed supplies of 5 rakes a day.

?ECL is a BIFR company and we had to withdraw from our fixed deposits for paying salaries to our workers,? an ECL official said. An NTPC official, on the condition of anonymity, said the price demanded by CIL didn?t match the quality of coal supplied. ?We are paying the price of silk, while we are being supplied cotton,? the official said.

NTPC is not the lone company questioning the quality of coal supplied by CIL. CESC chairman Sanjiv Goenka and DVC chief RN Sen have also repeatedly complained about coal quality and demanded third-party sampling both at the pit head and plant end.

CIL, however, while refusing to agree to third-party sampling at the unloading point or at the plant end, has said it?s okay with doing so at the pit head or the loading point. ?CIL is not responsible for delivery and nor does it have the responsibility to oversee what is happening during transit. So, it cannot give any quality assurance at the delivery point. If CIL is asked to take responsibility of delivery, then it will have to set up a mechanism for it and realise required charges,? said Rao.