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The ongoing dispute between energy giants NTPC and Coal India (CIL) over coal quality, that has jeopardized 4,500 MW power availability for consumers across states, is set to turn murkier with the power generator today refusing to acknowledge the outstanding dues of Rs 1,000 crore for CIL. The miner has already asserted that supplies will not resume completely until past dues are paid.
Coal ministry stepped in to salvage the situation with coal secretary S K Srivastava asking CIL Chairman Narsing Rao and NTPC Chairman Arup Roy Chaudhury to amicably resolve the issue with solutions accepted to both the parties in a meeting today.
“We have not stopped payments. We have paid to them (Eastern Coalfields Ltd or ECL) what was their due based on the quality we have received. There is no outstanding amount left from our side,” NTPC Director Operations N N Misra said briefing the media on the issue. Under the current GCV system, NTPC has to pay ECL for coal at the rate of Rs 640 per tonne but it has been paying only Rs 300 per tonne since October.
Misra, however, dodged questions on the legal provisions under which the payments were stopped to ECL. He said the Fuel Supply Agreement (FSA) does not provide for arbitration in case of dispute over quality. He also asked for a technical explanation from CIL for bad quality coal received and added that the issue has increased cost of generation at Kahalgaon and Farakka power stations as NTPC has to import more coal for blending to fill the gap of domestic shortage.
The companies have been engaged in a bitter fight, particularly since the past week, over the results of joint testing of coal samples carried out to ascertain quality. While CIL claims tests showed higher quality coal was supplied to NTPC’s stations than what it paid for, NTPC maintains otherwise. The power generator also raised doubts over the credibility of testing methods and samples used.
While ECL, a CIL subsidiary, has been supplying coal to Farakka and Kahalgaon stations of NTPC in West Bengal and Bihar since 15 years, the quality issue erupted after the switchover to GCV-based pricing system in January 2012. Misra said CIL adopted the globally accepted GCV pricing system without being able to replicate the international best practices of crushing, washing and installing testing equipment.
“Until CIL is able to build their infrastructure for required for GCV measurement or they are able to introduce third-party sampling, payment to be made should be based on the measurement of GCV done at NTPC stations,” Misra said. Overall, outstanding dues by NTPC to all CIL subsidiaries have swelled to Rs 2,000 crore. The generator makes payment of around Rs 20,000 crore to CIL for coal annually.
Meanwhile, Chairmen of the two companies, S Narsing Rao and Arup Roy Chaudhury, are slated to meet coal secretary S K Srivastav to discuss solutions for resolving the dispute.
