CERC is likely to follow the same principle for the rest of NTPC's plants leading to large differences in the fuel cost recovery. However, Ind-Ra expects NTPC to contest the same through regulatory process and initiate steps to install the infrastructure for measurement of coal GCV on as received basis. There is also a possibility of a dialogue between NTPC and Coal India (CIL) to resolve differences over coal grade slippages.
As per CERC's tariff regulations 2014-2019, coal GCV has to be measured at the point of unloading of the coal at the power station gate, referred to as-received basis compared to the earlier regulations, which allowed measurement of coal GCV at the point before coal is fired, referred to as-fired basis. In its petition to CERC, NTPC had been highlighting the lack of infrastructure at its plants as the reason for its inability to measure coal GCV on as-received basis. Therefore, CERC, in the absence of data on as-received basis, has now considered the GCV on as-billed basis while arriving at the ECR leading to the consideration of a higher GCV rate.
CERC had decided to shift to the as-received basis of GCV measurement so that: a) the generating company bears the inefficiencies if any, post unloading of the coal and b) the generating company takes up the coal grade slippage with the coal supplier company and resolve it. On the other hand, NTPC had been highlighting problems with respect to the measurement of GCV on as-received basis and was seeking as-fired basis on four grounds. Firstly coal samples taken after the crushing of coal for firing are of small and homogenous size compared to samples taken from wagons which are big and heterogeneous. Secondly, sample collection time from wagons is longer leading to demurrage charges. Thirdly, safety for personnel collecting is better when samples are taken after crushing. Lastly samples taken from the wagons may not be accurately representative, since often good quality coal could be loaded at the top and superficial layers become dry during the transportation, while the moisture percolates inside the wagons to the lower layers.
The difference between the GCV on as-received and as-fired basis is governed by the ambient temperature, type of coal and duration for which coal is stored. As per the Central Electricity Authority of India, the heat loss during such time should not be more than 0.1% in GCV value, which is in line with international studies. However, in this case the difference between the GCV of the coal works out to 20%-31%.
Ind-Ra notes, that NTPC has been contesting the GCV calculation and had been highlighting the grade slippages in the quality of coal. The grade slippage discussion between CIL and NTPC has become more visible post the January 2012 change in coal grading methodology to GCV based grading from the earlier used heat value based system of grading.
Ind-Ra notes, NTPC over the last two years has seen tightening of operational norms- namely the station heat rate, specific consumption and auxiliary consumption, change in basis for providing the capacity charge incentives to plant load factor instead of plant availability factor and lower tax arbitrage. All these have had a negative impact on NTPC's profitability.
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