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  1. Private power body blames railways for coal shortage

Private power body blames railways for coal shortage

The Association of Power Producers (APP), which represents private power developers, has written to railway minister Suresh Prabhu...

By: | New Delhi | Published: January 23, 2015 1:14 AM
Beyond the coalblock controversy, the new government, headed by Prime Minister Narendra Modi, has announced this year an ambitious target of doubling the coal behemoth CIL's output from the present 462 million tonnes to about one billion tonnes by 2019.

The railways has defended itself saying that it is not consulted by CIL before signing fuel supply agreements.

The Association of Power Producers (APP), which represents private power developers, has written to railway minister Suresh Prabhu alleging that there is a lack of coordination between railways and Coal India (CIL) and its subsidiaries, leading to coal shortage. APP said that it was leading to ‘meaningless’ fuel supply agreements as the coal miner does not factor in railways’ inability to transport contracted amount to power plants.

The APP says that the number of rakes allotted by railways to CIL is far lower than needed to transport the contracted quantity to the power plants. The railways has defended itself saying that it is not consulted by CIL before signing fuel supply agreements. “Considering that the railways is the only enabler of the coal transportation under the FSAs, the fact that the railways is expressing its inability to transport coal as per offers made by the CIL subsidiaries on the ground that they were not consulted while framing the FSAs makes it meaningless”, APP said.

It has further complained that railways also metes out discriminatory treatment towards independent power producers while favouring state-owned power plants in allocating resources for transportation of coal. APP has claimed that the quantity of coal dispatched by railways as a percentage of contracted quantity, known as materialisation, is much lower in case of independent power producers in comparison to those plants run by PSUs. In the March-July period of FY15, materialisation for IPPs was 43% while for PSUs it was 97% despite having a common coal supplier — Central Coalfields, a CIL arm — for the plants.

Coal-Railway

“In case of IPPs, the materialisation is mostly less than the trigger levels of 65% specified in the FSA, even though the trigger level is considerably lower than the trigger level of 90% in case of pre-2009 which are public sector plants,” APP said.

APP also alleged that the Eastern Central Railways provides more rakes to plants lying in its zone compared to those outside, despite having the same coal source, in a bid to retain control and maximise their revenue. This impacts IPPs and PSUs alike. As per the APP, plants lying outside the ECR zone received only 73% of rakes while those inside the zone were provided with more rakes than allotted, at 112%.

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