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APR 04 2013

NTPC not to sign FSAs with Coal India over coal quality

  • Economic Times, ET Bureau / Hyderabad
  • Created: Thu 04th APR 2013

India's largest power producer NTPC has refused to sign fuel supply agreements with Coal India Ltd (CIL) as it feels the state-run firm was supplying inferior quality coal.

The Prime Minister's Office (PMO) is pushing CIL to sign FSAs for supply of a minimum threshold of coal to power producers but NTPC feels the world's largest coal producer was supplying "rocks and boulders" just to meet its supply commitment.

NTPC Chairman and Managing Director Arup Roy Choudhury said it has agreed on almost all terms and conditions of the FSAs and is ready to sign the agreements provided CIL promises to give a minimum calorific value coal.

"They are giving us poor quality coal ... we don't want it," he said, adding that the quality of coal NTPC receives is "extremely" poor and sometimes "it is full of stones, boulders and dirt".

NTPC power plants need coal of minimum 3,100 kilocalories but CIL at times has supplied coal with average heat generating capacity of about 2,100 kilocalories.

"The boilers at the NTPC plant are designed to handle coal of a certain quality (3100 kilocalories) and if that are fed with inferior quality fuel it would have an impact on the equipment and overall efficiency of the plant," he said.

NTPC buys close to 140 million tons of coal to fire its thermal power plants. While most of CIL's other customers have signed on dotted lines, NTPC has not signed FSAs for 4,500 MW power generation capacity.

The NTPC head said the company has resolved all the issues with CIL and the only matter coming in the way of signing the FSAs is "poor quality" coal.

He claimed CIL wants bonus even though it has met its supply commitment by including inferior quality coal in the consignment.

"We need to resolve this quality issue... if need be the matter should go to Cabinet for resolution," Choudhury said.

Power Secretary P Uma Shankar on the other hand said that his ministry and coal ministry should be able to solve the problem amicably.

"It is an issue of supply of a certain grade of coal between the two companies ... and it can be sorted out at the ministerial level," Shankar said.

NTPC has even claimed that of the total quantity of coal supplied to the company by the coal major as much as 10 per cent of it is lesser grade fuel.

"If 10 per cent of the total supply is poor quality than the less to the company would be a lot," he said adding that the Coal India is supplying fuel of less than 3100 kilocalories.

So far 56 power generation companies have signed FSAs with Coal India.

Prime Minister Manmohan Singh has said that the fuel supply -- both coal and gas -- to power projects has been posing problems.

"The ministries are working to reach a resolution of these problems in a time bound manner. I hope we will see results in the next three weeks," he said today.


Coal Coal India Limited NTPC Ltd Arup Roy Choudhury PMO Fuel Supply Agreement CIL Power India

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