The Nagpur headquartered Western Coalfields Ltd's (WCL's) ongoing spat with its second largest customer, Madhya Pradesh Electricity Board (MPEB), has taken an interesting turn with the coal company refusing to supply coal to the latter unless past dues are cleared.
The past dues, as on May 15, amount to a staggering Rs 378.99 crore out of which Rs 278.76 crore were a `clear demand' by WCL, while Rs 100.23 crore have been disputed by the electricity board.
The dues have been mounting since July 1997 when MPEB ran into financial problems and could not meet its payment commitments.
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The WCL served a notice on the MPEB on May 9, giving it one month period to clear the `undisputed' demand. The notice was served under clause 8.4 of the `coal supply agreement-1985' between the WCL and the MPEB.
The agreement was drafted by the then coal secretary and chairman of Tamil Nadu Electricity Board (TNEB), B Vijayraghwan and, according to WCL, is still in vogue as no new agreement, which supersedes it, has been signed.
Significantly, the notice was served after a visit here by the Union minister for power, mines and minerals, P Kumaramangalam on May 6. The minister had categorically declared that MPEB would not be granted any more coal if it did not clear its dues.
Sympathising with the MPEB, Kumaramangalam had said the coal sector was also going through tremendous strain and could not carry `such burdens forever'. He had said WCL was facing a `liquidity crunch' even though it was one of Coal India Ltd's (CIL's) better performing subsidiaries.
The WCL had declared a profit of Rs 450 crore for the financial year ended March 31, but Kumaramangalam said it was negated on amount of the high outstanding from the power sector. The coal company stands to recover a total of Rs 545.39 crore (of which Rs 338.12 crore is undisputed) from the power sector. Its power sector customers include the MSEB, the Gujarat Electricity Board (GEB) and the Karnataka State Electricity Board (KSEB).
Even as WCL served the notice, MPEB approached the Jabalpur High Court and obtained a restraining order against the coal company. The next hearing of the case has been fixed for July 3.
The MPEB claimed that WCL had unilaterally stopped supply of coal to its thermal power stations as a result of which it had to cut down generation from its 1104 MW Satpura Thermal Power Station.
The WCL has subsequently claimed that it did not stop any supplies to the MPEB. A WCL spokesman gave the despatch figures for the month which go to show that 71,562 metric tonnes of coal were supplied to MPEB's Satpura Thermal Power Station between May 9 and May 13.
"Supplies are being effected on a daily basis and we have not stopped despatches for any day of the month," said WCL's general manager (Sales and Marketing), K Y Kelkar. Sources in the coal company said this was the first time that a notice has been served on a customer.