Coal quality and quantity issues surface again; CIL denies grade slippage

Blame game ensued again between the ministry of coal and Coal India (CIL), on the one hand, and the power ministry and thermal power stations, on the other, over the quality of coal supplied by CIL.

Close to half a dozen states and NTPC have written to the ministry of power, complaining against discrepancy in coal quality and the billed amount. This, they said, is leading to an annual loss of over Rs 10,000 crore.  

Chief ministers of Uttar Pradesh, Madhya Pradesh, Andhra Pradesh, Punjab, Haryana, Telangana along with the ministry of power and NTPC have written to the ministry of coal to examine the matter.

In the letters reviewed by Business Standard, states have alleged that the quality and quantity of coal they receive is not the same at the loading end where it is billed. The state governments have stated that this grade slippage is leading to an increase in the cost of electricity for their consumers.  

As the cost of coal in power cost is a pass-through on consumers, the stated loss of Rs 10,000 crore annually translates into a 10 paise increase in consumer electricity tariff, said a senior power sector executive. The generators have also cited that third party sampling, done at the dispatch end, is not proving to be useful. “The financial position of the state distribution utilities is bad and the present system of coal supply and mismatch in quantity is adding to our burden,” said a state government official.

CIL has denied any such allegations, saying that the miner is adhering to coal grade and quality and instances of grade slippage have actually come down. “Grade conformity of coal supplied from CIL, during April-February 2021, jumped to 65 per cent against 59 per cent in the same period last year. Coal companies do not declare the average grade of coal they produce but it is determined by the coal controller’s office annually,” CIL said in an emailed reply.

It was in 2015 that the Centre came out with a detailed procedure for third-party sampling of coal and dispute resolution for coal quality.

The decision followed a public spat between NTPC and CIL over quality with the miner stopping coal supply to NTPC after it complained of adulteration.

Government-owned Central Institute of Mining and Fuel Research (CIMFR) was appointed a third-party agency to sample coal on behalf of both the coal company and power generators. CIMFR does the sampling of coal grade and quality at the dispatch end and the coal is billed accordingly.

State-owned power generators are now alleging that there is at least a 2-3 level grade slippage and the sampling and billing should be done at the coal unloading/thermal power plant end.

CIL, in its response, said that recently re-assessment of coal grading of 35 of its high-capacity mines was done by the ministry of coal.

According to it, no variation was detected in the coal grade of the mines of its four subsidiaries and there were minor variations in three subsidiaries.

 “Of the 374 mines assessed during the ongoing fiscal year, gradation remained unchanged in 335 mines. In fact, 15 mines were upgraded on coal quality,” CIL said.

Recently, the ministry of coal convened an inter-departmental meeting to discuss the matter and has now suggested that agencies apart from CIMFR should be employed for sampling of coal. The coal ministry has also suggested that railways should also be a party to quality assurance.

Sources said the coal ministry has proposed that private labs and testing agencies be brought on board for coal sampling. “It should be the power generators which should get testing agencies and sample coal, if they do not believe in the CIMFR readings. Sampling should happen at the dispatch end. CIL can’t be responsible for the inefficiency of coal transport, weather changes and other such variables at the receiving end,” said an official.