As many as 35 small and medium refractory (fire-proof bricks) manufacturing units are reported to be under some degree of financial strain on account of increased expenses on coal. The industry has alleged that the Southern Eastern Coal Field (SECL) has discontinued coal linkage for number of refractory manufacturing units. This, industry representatives say, has led them to source expensive coal from open auctions.
Units in the Jabalpur and Katni region of Madhya Pradesh make refractory for large industries like steel, aluminum, and cement and copper.
Arvind Gugalia, president, Madhya Pradesh Refractory Manufacturing Association, said: “Each unit requires at least 150 tonnes of coal per month. SECL has discontinued the coal-linkage of units which failed to lift the allocated stock. The units are sourcing coal from auctions. All refractory units are thus working under a supply constraint.”
A senior official of SECL said: “Under the new sales policy, SECL can discontinue coal-linkage of a refractory unit if does not lift its stock within 12 months. The linkage can be cancelled if the stock is not lifted in 36 months. The refectories should go through the New Coal Sales Policy and contact either the state agency (Laghu Udyog Nigam) or Coal India.”
Under the New Coal Sales Policy, units which have less than 4,200 tonnes of coal requirement per annum are not supplied directly. They are, instead, supplied through state agencies with which SECL has a Fuel Supply Agreement (FSA).
According to Gugalia, almost 25 units are not being supplied coal from SECL. The cost of coal for each unit has increased by Rs 1,000 per tonne and has reached Rs 3,000 per tonne.
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Gugalia added: “They (SECL) assure us that new sales rules have been framed, but we have not seen even format of those rules. We have moved Court. The state agency Laghu Udyog Nigam did not sign FSA with SECL. As a result, there was no coal supply during April, May and June this year.”
Earlier all units had direct coal linkages. But due to a recession six years ago, refractory units failed to lift their stocks and lost their linkages. The Mahakaushal refractory units employ approximately 6,000 people.