CONSUMERS’ PAGE

Present Coal Scenario:

In the new fiscal, India’s overall coal production has gone up by 8.85% compared to April last year. However, overall production of coal has reduced to 73.14 MT from 107.84 MT last month. Coal India Limited has produced 57.57 MT coal in April, 7.6% higher compared to the same month last year. While, coal production by SCCL have gone up by 8.53%. Coal production by captive mines this month have gone up by 18.93%. on a y-o-y basis. Overall coal despatch in India has gone up by 11% compared to April ’22 which is high than the average growth in coal despatch in the last fiscal (7.09%). Coal despatch by CIL has also gone up by nearly 9%.

1. Submission regarding high deviation between third-party and referee results of coal supplied to Power Sector by ECL:

Power Sector consumers have been suffering due to significantly high variance between the referee Analysis results and third-party analysis results of the coal samples taken from ECL’s Salanpur area (SLS1) followed by Mugma, SonepurBazari, Bankola, Pandaveswar, Kajora etc. during FY 2020-21. The referee analysis results of most of the samples challenged by the coal company show the coal grade to be 1-4 grades higher than the third-party analysis results of the same samples.

In many instances, the referee results are abysmally higher than the analysis results by the third-party sampling agency. However, as per BIS standard, precision for repeat ability of the analysis of the same samples in two different labs should not be more than 65 kcal/ kg. Therefore, such high instances of variation between the referee and third-party results is creating uncertainty over determining the actual grade of coal delivered to the Utilities.

Submissions have been made to the Hon’ble Ministry of Coal, CCO, CIL and third party agency CSIR-CIMFR to intervene and take up the matter with ECL in order to resolve the issue of such high-grade variation between the referee analysis results and the reported results of the third-party sampling agency.

2. Submission by Power Sector consumers to issue proforma invoice on daily coal despatch/lifting via Road mode under Usance LC mode of payment:

As per the point A-5 of Methodology extending Usance LC for the coal supplies under the FSAs issued by SECL / CIL it is mentioned that, the pro-forma invoice shall be raised on rake to rake basis in case of rail despatches and on daily basis in case of despatch by other modes. However, SECL has started taking bulk payment from its customers under the LC mechanism before issuing (in case of other than Railways) sale orders to initiate the actual supply of coal from February ’23 onwards.

Request has been made to SECL to issue proforma invoice/payment invoice on daily despatch/lifting via Road mode as in the Usance LC SOP for extending LC mode of payment facility to the Power Sector consumers.

grade determination of unsampled coal quantity as per FSA and process coal value reconciliation:

According to the terms of the tripartite agreement, third-party sampling needs to be done for any quantity of coal supplied to the Power Sector. However, a significant amount of coal supplied from SECL to the Power Sector has been delivered without conducting third-party sampling during FY 2022-23. Even joint sampling was not conducted for the delivered quantity in case the third-party sampling is not done as per the FSA provision.

As a result, many Utilities received a considerable amount of unsampled coal for which reconciliation against grade slippage could not be done. As per the FSA, if coal samples are not collected from a source/despatch point the weighted average of the most recent results available in any preceding month against respective source and coal grade shall be adopted for such dispatches.

Request has been made to SECL and CIL so that grade determination of the unsampled quantity supplied by SECL may be finalised as per FSA provision, based on which Coal value reconciliation may be carried out for the delivered quantity and credit/debit notes may be issued accordingly.

4. Submission by Power Sector consumers requesting refund of differential GST amounts along with reimbursement for idle freight:

A number of CIL Subsidiaries – MCL, SECL & WCL are not providing refund of differential GST amounts while providing reimbursement for idle freights while some of the other subsidiaries such as ECL and CCL are providing underloading-refund along with GST components. Therefore, the consumers procuring coal from the Subsidiaries which are not refunding the

GST amounts are being affected financially despite no fault from their side.

Request has been made to CIL for providing refund of differential GST amounts from all the subsidiary coal companies uniformly while providing reimbursement on account of underloading of rakes.

5. Submission to expedite NRS Linkage Auction under Tranche – VI for Captive Power Plants (CPPs) by Coal India Ltd:

Demand of coal in the Industries including their CPP units has also accelerated in recent months. Though supply to the NRS has increased in the past few months, coal despatch is still insufficient compared to their requirement. This has led them to purchase coal from the open market by paying a hefty premium and import coal from different sources, putting huge financial burden especially on the Captive Power Plants.

Request has been made to MoC and CIL to conduct the Tranche- VI NRS Linkage Auction for CPP Sub-sector at the earliest possible.

6. Submissions by consumers from Cement Sub-Sector regarding offer of coal under Tranche-VI NRS Linkage Auction:

There has been a substantial increase in the capacity of cement plants across the region resulting in high coal demand for the industries. Considering the rise in demand, consumers from Cement Sub-sector have pointed out that offer of coal by CIL under Tranche-VI NRS Linkage Auction has been inadequate.

Request has been made to MoC and CIL that a minimum of 10 million tonnes should be allotted for the cement sub-sector in Tranche VI.

It is also requested that the timeline for Tranche VI NRS Linkage Auction may be extended by at least 15 days in order to complete the required formalities.

In Tranche-VI, offer of coal via rail mode is meagre. As offtake of coal via road mode becomes financially unviable for plants located at a longer distance from the mines, it is requested that offer of coal via rail mode may be substantially increased.

North-eastern and Eastern cement plants have stressed that offer has not been provided from Eastern Coalfields Ltd (ECL) under the upcoming linkage auction. It is therefore requested that adequate quantity may be offered from ECL as well considering the demand from consumers of that region.

7. Submission by NRS consumers to include CPPs in the fair distribution guideline of coal

As per fair distribution guideline of coal issued by the Ministry available domestic coal shall be distributed amongst the central and state GENCOs and IPPs procuring via rail mode in a fair and transparent manner. However, the Captive Power Plants (CPPs) are not included in the fair distribution guideline

As the CPPs add to the total generating capacity of the country and contribute directly or indirectly to meet the increasing power demand in the high demand scenario, it has been requested to MoC to include CPPs procuring coal via rail and RcR mode in the fair distribution guideline of coal as well.