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Corporate Mar 25, 2013

CIL should not get incentives for low quality coal: NTPC

New Delhi: State-owned Coal India Limited should not be given incentives that it gets for exceeding the minimum assured quantity in case it supplies inferior quality fuel to power plants, a top NTPC official said today.

As per the fuel supply agreement, if CIL supplies more than the minimum assured quantity of 80 percent of the total order to its clients, then the company is provided with some incentives.

NTPC chief Arup Roy Choudhury. Image courtesy PIB

NTPC chief Arup Roy Choudhury. Image courtesy PIB

Now, some power producers want that if the quality of the fuel supplied is not up to the mark then there should not be any incentive for the coal major.

"We have resolved 95 percent of all our issues. There are only one or two issues that remain to be sorted out, and one of them is the quality of coal," NTPC chairman and managing director Arup Roy Choudhury said on the sidelines of a SCOPE event.

He added that if the coal major supplies cheap quality of coal to thermal power generating stations, it should not be given any incentives.

"We cannot sign an FSA (fuel supply agreement) without knowing what is the quality of the coal, but if they (Coal India) give low quality coal to us they should not be incentivised, this is one big issue which remains to be sorted out," Choudhury said.

He added that CIL has agreed to a third party measurement of coal to ascertain its quality.

"They have agreed to a third party measurement but that will come only in end September," he said, adding that the company's equipment is not designed to handle low calorific value coal and require blending.

Although Coal India has switched to the GCV (Gross Calorific Value) formula of coal, the company is yet to equip its washing and crushing units on a par with international standards.

Coal India has so far signed fuel supply pacts with 56 power plants.

The deadline set by the Prime Minister's Office for signing of FSAs between CIL and power producers expired in January.

Meanwhile, Choudhury also said that the coal mining sector has not kept pace with power generation.

"We are not short of coal, we have "too much" but we do not mine enough...the production is less," he said.

Pitching for a coal regulator, he also said that there is need for more players in the mining sector and greater transparency.

PTI

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