Consumers' Page

Present Coal Scenario

State-owned Coal India Limited has produced 40.38 million tonnes of coal in April, 2020 amid the devastating crisis caused by the coronavirus pandemic. It is praiseworthy that in spite of dampening demand from all major coal consuming sectors of the country, CIL Subsidiaries have continued with their productions vigorously.

Company’s coal offtake fi gure stands at 39.03 million tonnes in this month. The offtake amount has slipped by 25.4 percent compared to April, 2019.

Common concerns faced by both Power and Non-Power sectors:

1. Extension of time for deposition of payment by E-auction/FSA customers:

The unprecedented situation caused by the pandemic outbreak enabled the Central government to further extend the nationwide lockdown for a second term from 15th April to 3rd May, 2020. The prevailing condition increased the problems of Power utilities and Industries, who were already struggling due to sinking demand, lack of workforce and crisis of fund.

To tackle the situation, coal consumers across the board have requested the Ministry of Coal and CIL to extend the last date of payment against the coal allotted to them through FSA/ E-auctions.

Response: Considering the adverse situation, CIL has extended last date of deposition of payment has been considered for seven more working days, till 10th May' 2020) from the date of withdrawal of lock down in those cases where the last date as per original schedule of payment is fallen within the lock-down period.

2. Extension of Usance LC for power

and NRS consumers: Provision of LC facility was already embedded in CIL’s supply contracts for Power Sector. However, this was not included in Non-power FSA as an as an alternative mode of payment for procuring coal. Later on IRLC facility was provided to NRS consumers. Under the present situation, consumers across the board had appealed for Usance LC to be implemented for both Power and Non-power FSAs.

Response: Considering the request from consumers, CIL has extended the facility of Usance LC as a mode of payment for both Power and NRS consumers in addition to advance payment and irrevocable Revolving Letter of Credit (IRLC) for sourcing coal through FSAs and various Eauction routes.

3. Request for extension of RDO valid

ity: In view of the prevailing lockdown in the country the consumers requested for extension of the validity of Road Delivery Orders (RDOs) which were supposed to expire within the lockdown period.

Response: A number of Subsidiary coal companies of CIL have extended the validity of RDOs beyond the lockdown period so that the consumers can continue procuring coal.

4. Request for Reserve price to be kept same as notified price in the forthcom

ing auctions for both sectors: Due to increase in stock at CIL Collieries and reduced dispatches the consumers have requested CIL to keep the Reserve Price same as the Notified Price for the forth- coming Spot/ Exclusive/Special Forward auctions without charging any addon as applicable before.

Response: CIL has reviewed the price of coal to be kept under various E-auction schemes in view of the difficult market conditions and prolonged period of lockdown and decided to keep the reserve price of coal, same as notified price for both sectors for the E-auctions to be held between April’20 to September’20.

5. Appeal for return of all kind of refunds by CIL Subsidiaries to the Utili

ties and Industries: Requests have been made by consumers from both sectors to consider immediate return of all kinds of refunds including security deposits, BGs, GST, CST, pending coal value if any etc. submitted to Subsidiaries.

Response: The national miner has urged its Subsidiaries to immediately expedite the process of releasing all kind of refunds. Most of the Subsidiaries have started taking initiatives to streamline the refunds.

6. Request for not imposing penalty

on consumers for short-lifting: The ongoing lock down across the nation has compelled several Power Utilities to run at low Plant Load Factor (PLF) while many Industries are going through complete or partial closure. So the requirement of fuel has dipped drastically for coal consumers across the board. Also, unloading of coal has become difficult due to scarcity of workforce at plant ends.

It is requested that the consumers are not penalised for short-lifting of allotted quantity under the FSA during this period of crisis.

Response: As per central government’s directive, the lockdown period is considered as a Force-majeure. While discussing the matter with the coal companies it is found that penalty for short-lifting would not be applicable for the lockdown period as per force-majeure clause.

Issues faced exclusively by Power Sector Consumers:

7. Request for Waiver of Performance Incentive (PI) for coal supplied to

Power Utilities: In view of financial hardship of the consumers due to sluggish demand and difficult market conditions as well as large coal stock at the pit heads of the Subsidiary coal companies, the Power sector consumers have

requested CIL to waive off Performance Incentive (PI) under different power FSAs for coal supplies beyond the stipulated level.

Response: Considering the woes of the power utilities, CIL has instructed all the Subsidiaries to waive off PIs under all Power FSAs towards the dispatches for the first & second quarters of the current fiscal (Apr-Sep, 2020).

8. Request for improving quality and

reduce cost of coal from BCCL: Due to multiple coal quality issues including Wide variation between billed coal quality and actual coal quality received at plant ends, unsatisfactory third party sampling due to various reasons and unusual variation between analysed grade of third party and that of the referee labs have made procuring coal from BCCL difficult for Power consumers. Conversion of erstwhile non-coking coal into coking coal significantly increased the price of the said grades

The consumers have requested the Subsidiary to take appropriate measures to improve the quality and create a conducive environment for third party sampling & analysis and consider price rationalization to the extent possible.

Response: The Subsidiary has reduced the price of W-IV, W-V and W-VI grades of HMVC coal by 10 percent.

9. Request for offering coal through Special Forward E-auction from CCL

directly via Rail mode: Central Coalfields Limited (CCL) has offered coal through Special Forward e-Auction 2019-20, Phase-III by Road/ RcR Mode for Power Sector consumers. However, under the present crisis, the Power Utilities requested to supply coal directly via Rail Mode only.

Response: CCL has assured to offer coal to the consumers only via Rail Mode.

Issues faced exclusively by NRS consumers:

10. Request for reviewing the assessment of Normative Coal Requirement & ACQ for CPPs under NRS Linkage

Auction FSAs: Aluminium has a continuous manufacturing process. So the CPP plants for aluminium run at almost 95 to 99% PLF, while CEA norms assume operations at 85% PLF while assessing coal requirement. This leads to under-assessment of coal requirement of Aluminium CPPs.

Requests have been made to MoC, CIL and CEA so that Calculation of normative requirement of Aluminium CPPs may be based on 95% PLF instead of 85% and ACQs may be adjusted upwards accordingly. It is also requested that the energy shortfall in Aluminium CPPs due to grade slippage may be proportionate increase in linkage quantity on a quarterly basis.

11. Consumers’ issues pertaining to WCL:

A. Request for safe exit option for NRS

consumers: Following price hike in 11 WCL mines on November, 2019, request has been made by the NRS consumers willing to exit from their respective FSAs due to the coal price hike that they should be immediately allowed to do so without any penal charges. Hundred percent of Performance Security, Financial Coverage and Advances deposited for availing the supply under these FSAs and the original Bank Guarantees may also be returned to the respective consumers.

B. Request to rollback the elevated coal

price in WCL mines: The NRS consumers have also appealed WCL to consider roll back the elevated price as favorable coal price may interest the Industries operating in close vicinity of those mines to continue procuring coal from the subsidiary.

C. Request not to impose restrictions regarding participating in future

tranches: The Industries have also requested WCL not to impose any restrictions on them for participating in future Tranches, including Tranche V.

Consumers’ issues related to Railways:

12. Request for Waiver of Busy Season

Surcharge: The freight traffi c has signifi cantly reduced due to subdued demand in several coal consuming sectors following the COVID-19 outbreak in March.

Consumers have appealed that the busy season surcharge on freight transport be waived off this year under the current circumstances.

13. Request for inclusion of coal freight under the classifi cation of es

sential commodities: The freight rate for almost all of coal and coal based products fall under rate class of 145A which is much higher than other essential commodities. Coal is considered to be one of the most signifi cant drivers of our economy as it is highly essential for both Power and manufacturing sectors.

To boost the economy, requests have been made by consumers to include coal in the bracket of essential commodities and reduce its freight rate accordingly.

14. Request for not levying penal charges on the consumers during pan

demic outbreak: Several coal consumers across the sectors are striving hard for their sustenance due to the present adverse condition dip in demand, lack of manpower and fund crunch. Therefore, the consumers across the board have collectively appealed for not levying penal charges like overloading, pushback etc on them.

15. Request for providing Usance LC

facility for payment of freights: In order to provide relief to Power Utilities It is requested that Railways may introduce Usance LC for payment of freight in line with the facility extended by MoC as it would be of immense help to Power and Non-power sector in this hour of crisis.