Consumers' Page

India’s overall coal production has dipped slightly in August ’22 (58.33 MT) compared to July (60.42 MT). However, production has grown by more than 8% on a y-o-y basis. Country’s main coal producer and national miner CIL’s production in August ’22 has been 46.22 MT, nearly 8.5% higher than same month last year (42.60 MT). Overall coal despatch figures in August ’22 (63.43 MT) has also gone down compared to last month due to ongoing monsoon. But compared to August last year, overall coal despatch has gone up by 5.5%. Country’s overall despatch of coal has been 355.77 MT so far in this fiscal (Apr-Aug ’22) which is close to 12% higher than the despatch figure of same period in last FY (317.87 MT).

1. Submission regarding refund against ungraded coal supplied before the issuance of CIL notification to identify below grade coal slabs:

CIL has issued a notice in July’22 regarding the price of raw coal with GCV 1500 to 2200 Kcal/kg into two slabs by identifying them as below grade coal. While the new notification may pave the path for better reconciliation against coal below G17 grade, it is unclear what would be the process of refund against ungraded coal supplied before issuance of the notification as it has been issued on a prospective effect. Earlier, for supply of coal below G17 grade or GCV less than 2200 Kcal/Kg, coal companies are to pay refund considering coal price at the rate of Rs.1/- per tonne to the consumer as per Power Sector FSA. Request has been made to CIL to either process the refund against supply of below G17 grade of coal as per previous rate (Rs.1/tonne) or issue the new price notification for below grade coal on a retrospective effect.

2. Request to Include Producer Gas Plant in FSA Categories for Coal Linkage:

Amid significant growth in coal based power generation which is increasing the apprehension about its impact on the environment, India needs urgent application of clean coal technologies to be able to harness its huge coal reserves as energy source and feedstock for the industry in an environmental friendly manner. This will also help India to achieve the targets set during COP21 to reduce Greenhouse emissions by 30%, by 2031. As of now, more than 300 Producer Gas Plant (PGP) are installed and out of them more than two- third of them are either non-operational or running under throttling conditions which is primarily due to nonavailability of consistent coal supply. Request has been made to MoC and CIL so that coal linkage can be availed under the category of Producer Gas Plant (PGP) in the upcoming auctions. As this would help to promote Green Technologies and to utilize the chemical energy embedded in coal by way of Gasification and also to convert coal to chemicals.

3. Request for not deducting GST amount in case of forfeiture of EMD:

As per GST Circular No. 178/10/2022-GST dtd 03.08.2022, applicability of GST on liquidated damages, compensation and penalty arising out of breach of contract or other provisions of law is certified. The circular states that earnest money deposit by the buyer of coal is a mere flow of money which is not a consideration for any supply and hence it should not be taxable.

Request has been made to CIL that GST should not be deducted in case of forfeiture of EMD due to shortlifting by the consumer.

4. Submission by Power Sector consumers regarding carry forward of rakes:

Utilities procuring coal from SECL are often receiving of less than their stipulated quantity due to a significant demand-supply mismatch caused by production issue and Railway constraints. As a result, the backlog of carry forward rakes from SECL to the power houses continue to accumulate. The power houses cannot re-indent the carry forward rakes every month due to huge blockage of funds and operational issues at the plant ends. As per the SOP laid down by CIL with regard to nonlapsing of rakes for Power Sector, it is interpreted that if the carry forward rakes are not re-indented within the given time-frame then it is considered as deemed delivered quantity which attracts penalty below trigger level. However, if the power houses are unwilling to re-indent the carry forward rakes due to nonsupply by SECl or other Subsidiary, then that quantity should not be considered as deemed delivery as it would allow more quantity to be available for supply to other plants in need. Request has been made to CIL so that the dispensation of carry forward rakes, not supplied during the time of allotment due to production issues / Railway constraints, may only be implemented for willing customers.

5. Submission requesting supply of coal as per ACQ instead of trigger level and increasing number of rakes to NRS FSA consumers:

NRS Linkage Auction consumers are still being allocated coal at trigger level (75% of ACQ) by the CIL Subsidiaries mostly via road mode. However, this 75% capping has been defined in the Fuel Supply Agreement (FSA) to determine the threshold of Compensation for short delivery/lifting in case of crisis for a few months by either side (buyer/ seller). This should not be considered as a final scale for allocation of coal for a longer period. Also, only a handful number of rakes are being allotted to the NRS consumers still now.

Request has been made to MoC and CIL to enable supply of coal as per ACQ instead of restricting it to the trigger level. As critical coal stock situation in country’s power plants have improved relatively, request has been made to MoC and CIL to immediately increase supply rakes to NRS including CPPs so that coal supply via Rail mode may be commensurate with their normative requirement.

6. Submission by NRS Consumers for immediate issuance of pending RDOs especially from SECL:

To mitigate the supply crisis via rail mode to the Industries, temporary Road sources against respective Railway sidings have been identified by SECL for conversion from Rail to Road mode for supply to the NRS consumers. However, issuance of Road Delivery Or-

ders (RDOs) from a number of SECL collieries including Gevra, Kusmunda, Jampali and Baroud are pending since May 2022, in Chirimiri OCP from January and in Raniatari from March 2022. It is perceived that coal is available in these mines as Spot e-auctions are being conducted from various collieries of SECL intermittently including some of the collieries mentioned above,

Request has been made to SECL and CIL to allow issuance of pending RDOs urgently. Where coal is not available both from the Secondary and Tertiary Sources, a suitable policy may be formulated in order to solve the ongoing impasse for a very long period.

7. Submission by Industries (including CPPs) for improvement in coal supply situation:

In spite of steady growth in coal demand among NRS consumers, only 10-12 rakes have been despatched per day to the Industries by CIL since the last few months, which is significantly lower than their daily requirement. Supply of coal via Road mode is also restricted to trigger level (75% of ACQ). As a result, many Industries are compelled to rely on coal from imported sources despite high global coal prices while continuous process plants are compelled to purchase power from the exchange while keeping their CPP units almost idle.

Request has been made to MoC and CIL to immediately increase rake supply to NRS, especially to plants located at long distance. It is also requested that coal quantity equivalent to ACQ may be supplied to the CPP-integrated plants as it would help the CPPs to generate at full capacity and excess power produced by the CPPs can be transmitted to the grid which would help meet growing power demand.

8. Submission to amend methodology in National Coal Index:

Strong linkage added to the imported coal pricing has impaired the National Coal Index, weakening the very purpose of computing and using this index to develop and strengthen commercial coal mining in India as the unprecedented rise in global coal prices has led to exorbitant increases in Statutory Payments, Performance Security Bank Guarantees and Monthly Payments. As hike in imported coal price is not permanent, it should not impact the very purpose of a strategic initiatives like commercial coal mining. Request has been made to MoC to revisit the mechanism of computing NCI and reduce linkage to the prices of imported coal.

9. Submission by NRS FSA consumers for not taking fresh advance of more than one month MSQ:

A number of CIL Subsidiaries are allowing the industries to book monthly quantities via rail mode by depositing coal value advance equivalent to one month MSQ to the concerned Railways. However, ECL is not allowing re-indenting of arrear rakes without further deposition of fresh coal value advance every month. Thus, advance amounts equivalent to Scheduled Quantity of multiple months are stuck with ECL. Request has been made to ECL and CIL to ensure that advance payment to be made by NRS consumers to the Railways may not be higher than coal value equivalent to MSQ of one month for movement of rakes as per the CIL directive.

10. Submission by NRS consumers requesting immediate release of longpending e-Auction rakes from SPURI& II sidings of MCL:

NRS Consumers procuring coal from SPUR – I & II sidings of MCL are struggling due to non-supply of a significant number of e-Auction rakes for more than one year. Some rakes are kept pending despite being higher on the indent seniority list. Thus, a huge amount of funds of these consumers are stuck with the coal company in the form of coal value advance for a prolonged period, limiting their resources to book coal from other (CIL auction/open market/imported) sources. Request has been made to MCL and CIL to prioritise supply of long-pending rakes from MCL for NRS consumers at the earliest possible