3. Activities of the Association

During the year 2020-21, the entire world had undergone an unprecedented crisis caused by the deadly COVID-19 pandemic outbreak and India was no exception. The contagion temporarily halted major production and business activities which had a cascading effect across all sectors including Coal.

Coal Consumers’ Association of India (CCAI) interacted with the Ministry of Coal, Power, Steel and DIPP, Ministry of Railways, Railway Board and the Zonal Railway offices, Chairman & Director Marketing and Senior officials of Coal India Limited (CIL) and its Subsidiary Coal Companies in order to highlight several operational hurdles faced by its valued members during this difficult period.

The Association also actively participated in the virtual meetings and video conferences organised by MoC, CIL and its Subsidiaries as physical meetings were prohibited and virtual interactions have become the new normal.

CCAI was instrumental in raising all the relevant issues, detrimental to the interests of the consumers across the board, pertaining to supply & transportation of coal, as well as taking an active part in formulation of new policies by disseminating the views and suggestions of our valued member organisations. It is worth mentioning that overall activities of the Association have increased manifolds during the year.

The Officials of the Association also visited CIL Subsidiaries including ECL in order to raise persistent issues related to coal quality and procurement from the region.

CCAI, alongwith its esteemed members participated in the 5th Joint Working Group Meeting on coal between India and Republic of Indonesia on 5th November 2020 in the valued presence of the Ministry of Coal and Indonesian Coal Mining Association (ICMA) discussing various business opportunities related to the dry fuel under the present socio-economic scenario.

The Association also made numerous representations on the basis of Constituent Complaints received from the Member Companies during the FY 2020-21 and appealed for policy-level changes in the co sector so that both Utilities and Industries may survive and thrive under ongoing adversities. As it is difficult to provide the true reflection of the Association's voluminous activities within a few pages, a glimpse of some of the concerns raised by CCAI during FY 2020-21 has been furnished below:

Operational issues:

* Request for Extension of time for deposition of coal value by E-auction/FSA customers:

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

To tackle the situation, Ministry of Coal and CIL were requested to extend the last date of payment against the coal allotted to them through FSA/ E-auctions. Considering the prevailing situation the extension was granted multiple times.

* Request for continuing temporary dispensation for change of mode of supply from Road to Rail:

The consumers having FSAs through linkage auction route, requested for temporary dispensation for change of coal supply route from Road to Rail to continue till the next financial year (March ’21) as road transport was highly affected due to persisting lockdown in parts of the country. Also there has been acute shortage of manpower for coal loading/unloading.

CIL had initially allowed change of mode form Road to Rail for orders booked under Special Forward E-auctions and FSAs through NRS Linkage Auction Route for three months (April-June2020), which has been extended for another three months (July-September 2020).

Provision of LC facility was already embedded in the FSA for the Power Sector but this was not included in Nonpower FSA as an as an alternative mode of payment for procuring coal. Later on IRLC facility was provided to NRS consumers.

Request was made for Usance LC to be implemented for both Power and Non-power FSAs. CIL extended the Usance LC mode of payment for NRS consumers as well) for sourcing coal through FSAs and various E-auction routes.

* Request for Change in Modalities of Usance LC facility:

In cases of Linkage/Exclusive/Special Forward Auction via Road mode, successful bidders have to submit a BG of 30 days in addition to the LC amount. For Rail mode, there is an additional requirement of 7-days equivalent coal value advance in cash/RTGS.

CIL has been requested for withdrawal of cash advance of 7 days coal value and requirement of BG against coal value equivalent for one month in Usance LC which is not required in procurement of imported coal.

* Request for extension of RDO validity for both Utilities and Industries:

Under the pandemic situation and the subsequent nationwide lockdown, the consumers across the board were facing extreme difficulties to procure coal within the stipulated time mentioned in their RDOs.

Submission was made for extension of the validity of Road Delivery Orders (RDOs) which were supposed to expire within the lockdown period. A number of Subsidiaries of CIL extended the validity of RDOs beyond the lockdown period so that the consumers may continue procuring coal.

For certain CIL Subsidiaries where RDOs are yet to be issued even after necessary payment has been made by the consumers, immediate issuance RDOs is requested.

* Submission regarding issues of regular short-receipt and overloading of coal from various Subsidiaries of CIL:

Both Power and NRS consumers have repeatedly raised the issues of Short-receipt and overloading of coal from Salanpur, Jhanjra, POCP-I & II, and Sonepur Bazari area of ECL, Dipka, Gevra and Old Kusmunda sidings of SECL, Birds Sounda-D Colliery of CCL etc.

Submissions were made made to CIL and Subsidiaries to reduce the instances of short-receipt and over-loading from the above mentioned ECL sidings and recalibration of weighbridges were requested at the earliest.

* Submission regarding keeping the reserve price of coals same as notified price under various e-Auctions:

A number of CIL Subsidiaries had kept the floor price at 10% higher than the notified price in most of the cases against the various E-auctions being conducted for both Power and Non-power sectors. However, due to economic downturn, Utilities and Industries are not in a position to have such a higher percentage of add-ons on notified price.

Request has been made to CIL to extend the facility of conducting Spot, Special Forward and Exclusive e-Auctions at respective notified price till March ’21. CIL 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.

* Request for notified price of coal for NRS consumers to be reduced:

Notified price of coal to NRS consumers is higher by 20% compared to Power sector consumers.

Request has been made so that notified price of coal for NRS consumers be brought at par with the price for Power sector consumers in order to reduce their dependence on imported coal.

Many old weighbridges lack the facility of weighment in bi-directional mode so weight printed on the wagons is considered. However, the tare weight of wagons increases with time due to rusting, deposition of coal fines and other materials. Therefore, considering the printed tare weight led to consumers receiving less coal.

Request has been made to MoC and CIL to ensure that bi-directional weighment facility is provided in the inmotion weighbridges.

* Submission for not considering carry-forward rakes as Deemed Delivered quantity:

As per the Rakes Carry forward SOP, a consumer can re-indent for the lapsed rakes for the next three successive months. However, if the consumer does not re-indent the rakes it is considered as deemed delivered quantity. As a result, the consumer has to pay penalty for lower lifting.

It is requested that if carry forward rakes are not re-indented then it should not be considered as deemed delivery for the consumers.

* Request for providing suitable date to the Power Sector consumers for signing of addendum for enhancement of ACQ upto 100 percent:

Certain CIl Subsidiaries including SECL recommended enhancement of ACQ upto 100% of the normative quantity from 90% previously.

Request was made to those specific Subsidiaries to provide a suitable date for signing of addendum pertaining to enhancement of ACQ upto 100% of the normative requirement and issue a notice regarding the need to submit additional documents if any by the consumers.

* Request for reviewing the assessment of Normative Coal Requirement & ACQ for CPPs under NRS Linkage Auction FSAs:

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.

Request was made 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.

Coal Quality related concerns:

* Grade slippage from specific areas of ECL, BCCL, CCL, MCL, SECL & WCL:

In spite of best effort and continuous monitoring done by CIL and Subsidiary Coal Companies consumers are still facing the issue of quality variance or coal grade slippage compared to the grades allotted to them as per the FSA to them from primary as well as secondary and tertiary sources of ECL, BCCL, CCL, MCL, SECL & WCL, which lead to huge financial loss to the consumers across the board and production plans of these companies are also getting adversely affected.

The MoC, CIL and the Subsidiaries are requested to take immediate and adequate measures to eradicate the issue of grade slippage and ensure supply of FSA grade of coal to the consumers.

* Submission regarding periodical re-gradation of coal mines:

To address the wide difference in GCV received and billed GCV, periodical re-gradation of coal may be considered on quarterly basis by the CCO or at least in those mines where there are recurrence of wide difference between declared grades and third party results.

Calculation of GCV on ARB basis as per International coal trading practice may be introduced. It would also expedite the analysis of sample because as per IS standard minimum time required for equilibration of the sample is 72 hours.

* Installation of equipments for segregation of stones & shells from coal:

Most of the Indian coal is of poor wash ability characteristics. Therefore it may not be possible to supply 100% coal through washeries. Hence, it is suggested that at least a mechanism like Deshaling equipment can be installed for segregation of stone & shale from coal mass before supply.

* Adjustment of ACQ as per actual GCV supplied as per 3rd Party/Referee result:

ACQ per MW entitlements for thermal power plants are calculated based on normative station heat rate at a particular GCV value. Therefore, adjustment of ACQ as per actual GCV supplied based on Third Party/Referee results is required. Accordingly there should be adjustment of ACQ / QQ based on yearly /quarterly weighted average of analysed GCV by third party agency / referee labs.

* Submission regarding delay in release of Referee analysis results by different CIL Subsidiaries:

In many cases, reports of referee analysis are pending for several years and the consumers are not able to get any status update of the same from the coal company. Settlement of quality claims as per 3rd Party Analysis results for samples which has not been challenged by have also been kept pending in many cases.

Request has been made to CIL and Subsidiaries to expedite the process of releasing the Referee results and immediately process the undisputed quality claims which have been kept on hold for long.

* Submission for providing option to choose 3rd party agency and sample collection in front of consumers:

There have been several instances where variations were observed by the Power Plants between the coal grade analysis results by CIMFR and results received at the Plant ends.

Therefore, it is requested that instead of present practice of engaging only one Third Party Agency, the consumers should have a choice to select from a list of designated Third Party Agencies at loading point.

* Submission regarding improvement of sample collection process at various Subsidiaries:

Huge difference is results are observed in coal sample analysis at the loading end and 3rd party analysis. To remove this discrepancy, improvement in modes of sample collection is requested. In case of Rail Mode, 25% sample (15 wagons) should be collected as per IS standards against current practice of 10% (6 wagons) for Third Party sampling and Analysis. For Road Mode, samples are taken from every 3rd truck instead of current practice of collecting samples from every 8th truck. This move will ensure that 33% of the trucks are sampled.

* Request for considering samples in case of coal grade variation beyond permissible limit:

As per BIS standard precision for repeatability of the analysis of same samples in 2 different labs should be within 65 kcal/ kg. If there is considerable variation between four samples beyond stipulated limits the Coal Companies and Third Party should take cognizance of the problem and try to find a solution.

* Request for enabling infrastructure Facilities for Third Party Sampling & Analysis at Loading End:

Non-availability of the required infrastructure facilities at loading end for carrying out 3rd Party Sampling and Analysis such as lighting facility, manual sample preparation due to non-availability of machines, nonavailability of separate rooms for keeping 3rd party samples, CCTV camera in the Referee labs for constant monitoring, not allowing consumers to witness the sampling and analysis process etc hampers the real purpose of 3rd Party sampling process.

Request has been made to CIL and Subsidiaries to make necessary resources available at the loading end for conducting the 3rd Party Sampling process in a more effective and transparent manner.

* Appeal for proportionate revision of linkage quantity in case of coal grade revision:

In certain mines under various Subsidiaries, the lifted coal has been downgraded but the linkage quantity remains the same. As a result, the consumers procuring coal from these mines do not get the required GCV value from the received quantity of coal.

It is requested by the NRS consumers to conduct a proportionate revision in linkage quantity in case of coal grade revision by the Subsidiary.

Refund Related Issues:

*Request to expedite the release of various forms of pending refunds:

Various forms of refunds pertaining to coal consumers across the board including operational refund such as, refund of advance coal value, refund of ad-valorem taxes, security depots, EMD/BGs, differential CST amounts and abnormal underloading/overloading charges and coal quality related refund such as differential coal value in case of grade slippage, excess surface moisture in coal and supply of ungraded coal have been pending since long from different CIL Subsidiaries.

CIL and its Subsidiaries were requested to expedite these refunds to the respective consumers. In case there is no definite timeline articulated in the FSA for disbursement of such refunds, a suitable time frame included in the FSAs.

* Request for processing refund for under loading of rakes based on Permissible carrying Capacity:

Though there is a provision of refund by coal companies in case of under loading of rakes, consumers do not get the full amount refunded as Coal Companies pay under loading charges limited to the difference of stencil capacity and actual weight of coal loaded in the wagon. But Railway charges freight as per Permissible Carrying Capacity/ chargeable weight, which is higher than stencil capacity.

Submission has been made to MoC and CIL requesting change in FSA provision of refund on account of underloading in line with Railways circular based on PCC instead of stencil capacity / CC.

* Submission regarding refund of Royalty, DMF, NMET and Differential GST in case of grade slippage:

If the analysed grade of coal is found to be less than the billed grade. Credit Notes are only issued for difference in basic price and other tax components like Royalty, DMF, NMET and Differential GST amounts are not refunded.

The concerned authorities have been requested to ensure inclusion of suitable clause in the FSA provisions regarding refund of pro-rata statutory charges.

* Request for not imposing penalty on consumers for short-lifting:

The adverse situation due to pandemic has compelled several Power Utilities to run at low Plant Load Factor (PLF) while many Industries also went through complete or partial closure causing the requirement of coal to dip drastically. Also, unloading of coal became difficult at that point due to scarcity of workforce at plant ends.

The Ministry of Coal and CIL were requested so that the consumers are not penalised for short-lifting of allotted quantity under the FSA during this period of crisis. The central government announced that the lockdown period is considered as a Force-majeure and hence no penalties were levied for short-lifting.

In view of the sluggish demand and difficult market conditions as well as large coal stock at the pit heads of the Subsidiary coal companies, Request was made on behalf of Power sector consumers to waive off Performance Incentive (PI) under different power FSAs for coal supplies beyond the stipulated level.

CIL has instructed all the Subsidiaries to waive off PIs under all Power FSAs towards the dispatches for the first & second quarters of the FY 2020-21 (Apr-Sep, 2020).

* Submission regarding refund against supply of ungraded coal to Power and NRS consumers:

In case of supply of ungraded coal to the Power Sector Consumers, refund amounts to be processed as per the FSA were long- pending from different Subsidiaries even in the tune of two years or more in some cases. Request has been made to CIL by so that the pending refunds on account of ungraded coal may be processed at the earliest.

In case of NRS consumers, they are not able to get a refund as there is no provision for issuing credit notes in case of supply of ungraded coal in the FSAs for NRS consumers. Hence, it is requested to CIL to expedite the formulation of a suitable policy in line with the Power sector so that the NRS consumers can get their requisite refund in these cases.

Issues related to Specific Subsidiaries:

* Request for Ramping up Production of lower grade coal by ECL:

TPPs are facing challenges to procure coal from ECL as it is mostly of higher grades (G4-G6), which even on energy adjusted basis, is expensive.

Submission has been made to ECL on behalf of the Power sector consumers to ramp up production of lower grade coal which is available in the subsidiary’s Rajmahal belt area so that it can be used for power generation.

* Erratic Referee sample analysis results of coal supplied by ECL to Power sector consumers:

It is witnessed that for Power sector consumers procuring coal from ECL, the Referee analysis results of sample for coal supplied by the coal company are often not in consonance with the quality of coal received at the Generating Station as indicated by the 3rd party analysis conducted by CSIR-CIMFR.

Request has been made to CIMFER, CIL and ECL to ensure proper storage of referee samples and the abnormal variation in result of referee samples with the concerned laboratory appropriately.

* Request for improving coal quality and reduce cost of coal from BCCL:

Due to multiple coal quality issues including continuous and significant grade slippage, unsatisfactory third party sampling and unusual variation between analysed grade of third party analysis and referee analysis, procuring coal from BCCL had become difficult. Also consumers found the usage of this washery grade coal unviable due to its high price difference with non-coking grade with the same GCV value.

Submission was made to BCCL to take appropriate measures to improve the quality to ensure supply of Noncoking coal with VM of around 20% or higher for the smooth function of power plants. Create a conducive environment for third party sampling & analysis and consider price rationalization to the extent possible. BCCL had briefly reduced the price of W-IV, W-V and W-VI grades of HMVC coal by 10 percent during May’20.However, its decision to revise the price structure of W-IV, V, VI has greatly impacted the landed cost of such coal. Request has been made for further reduction of price of BCCL washery grades IV, V & VI wherever possible.

The sudden price hike in 11 major WCL mines in early November ’19, has made it difficult for consumers especially from Non-power sector to source coal from there as they had already paid a high price during Tranche IV auctions.

Request has been made to CIL and WCL to either roll back the elevated coal price or at least consider reducing the hiked price to the extent possible or provide Safe Exit Clause’ to consumers willing to exit from their existing FSAs in view of the revised prices without any punitive actions/ charges. WCL authorities have allowed provision of safe-exit to the unwilling consumers who wish exit from their respective FSAs.

* Request for not imposing penalty for short-lifting from Wani Siding for NRS FSA consumers:

A number of NRS consumers procuring coal from WCL are not able to lift allotted quantity from the Subsidiary’s Wani sidings as the offered G13 grade of coal are not suitable for direct feed to the boilers and needs to be blended with high grade imported coal making it unviable for the plant. In order to lift 75% of ACQ from Wani siding as per the FSA clause, the consumers need to lift a huge number of rakes within less than 2 months which may not be feasible due to shortage in storage capacity. Also, coal price structure of Neeljay OCM, the newly introduced feeding source of Wani siding, is yet to be sent to the consumers.

WCL is requested for not penalizing the consumers for short-lifting from Wani sidings.

* Submission to expedite supply of crushed coal to Power sector from alternate sources of Kusmunda and Junadih of SECL:

Power sector consumers procuring coal from SECL have been struggling due to lack of supply from the Subsidiary’s Kusmunda and Junadih sidings since May, 2020. Though SECL is offering (-) 250mm coal from its New Kusmunda-2 and Old Kusmunda sidings temporarily to supplement the pending supply, the quality of coal there is not appropriate for usage in power plants without crushing.

Submissions were made to CIL and SECL to expedite supply of pending rakes with crushed coal to the Power sector consumers so that their generation schedule do not get hampered.

*Submission to SECL regarding supply of inferior grade of coal from tertiary sources:

NRS consumers procuring coal from SECL’s Mahan II colliery (primary source) were not able to lift the allotted G-12 grade of coal due to its unavailability. Hence, they were initially offered coal from Chhal as the secondary source. As the designated coal was not available there as well, the consumers were then allotted Balrampur OC as the tertiary source with a reduction of FSA grade from G-12 to G-13. However, the coal received from Balarampur OC was below the promised grade and not suitable for their requirements.

Request has been made to SECL so that contracted grade of coal can be supplied either from the primary source or from the tertiary sources.

* Request for offering coal through Special Forward E-auction from CCL directly via Rail mode:

Central Coalfields Limited (CCL) had 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.

CCL agreed to offer coal to the consumers only via Rail Mode.

* Request to CCL for immediate execution of tripartite agreement:

Request has been made on behalf of the NRS consumers procuring coal from CCL for immediate execution of the tripartite agreement against Special spot E-auction Phase –II held on 30.06.2020 between the coal company, consumers and the third party agency (QCI) so that the consumers are able to start procuring coal by availing the facility of 3rd Party Sampling & Analysis.

As per the CCL Notice No.CCL/HQ/M&S/STC/20-21/4283 dated 09.11.2020, the consumers procuring coal from mines operating completely or partially in designated forest lands, are being charged Rs. 57/-PMT as Forest Transit Fee.

As the consumers are already paying a number of additional charges such as COVID Cess, increased STC charges as well as increased base price of coal etc, submission has been made to CIL and CCL for not levying Forest Transit Fees on consumers.

Issues related to Railways:

* Request for Waiver of Busy Season Surcharge:

The freight traffic has significantly 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.

* Request for inclusion of coal freight under the classification of essential 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 significant 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.

* Oversupply of rakes to unwilling consumers amid COVID-19 crisis:

Indents are often being sent by the Railways to the consumers at one go in order to clear the backlog as it has surplus rolling stock. Request has been made for not sending indents to unwilling consumers as they are going through both financial and space constraints. It is also requested to ensure that the rakes coming in the seniority list do not get lapsed.

* Request for not levying penal charges on the consumers during pandemic 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.

* 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.

* Issue of difference between Permissible Carrying Capacity (PCC) / and Stencil Capacity (CC) of wagon:

In case of under-loading of rakes, total amount do not get refunded to the consumers, because as per FSA provision Coal Companies pay under loading charges limited to the difference of CC / stencil capacity and actual weight of coal loaded in the wagon. But Railways charge freight as per Permissible Carrying Capacity (PCC). In most cases PCC is more than CC.

Requests have been made to bring in change in FSA provision of refund for under-loading based on Permissible Carrying Capacity instead of stencil capacity / CC.

* Submission to Railways regarding discrepancy in the Tare Weight of rakes being received at the sidings:

During weighment of rakes at the electronic in-motion weighbridges, the actual tare weight of rakes is often found to be much higher than the designed tare weight in BOXNS and BOXNHL wagons which leads to short receipt of coal of equivalent quantity. Since the designed tare weight is also mentioned in the RR, the tare difference leads to significant over-charging of freight for quantity of coal not delivered to the buyers.

Request has been made to the Railway board to consider the actual tare weight of every wagon (if possible), conduct periodic assessment of tare weight of different types of wagons needs to be done at loading and unloading ends in presence of customers and the standard tare weight needs to be revised accordingly. Also, it has been requested to prepare the RR with correct weighment.

* Request for issuance of E-invoice with IRN note QR codes for all zonal Railways:

In spite of the notice issued by Ministry of Finance regarding issuance of E-invoice with IRN note QR code for the registered person under GST invoice having turnover of above 500 Cr.PA, several coal consumers are still not receiving RRs having IRN and QR code within stipulated time frame from the zonal Railways.

Request has been made to the Railway Board to advise all zonal railways to comply with the requirement of E-invoices as per GOI guidelines. In case any special exemption is allowed to Indian Railways in this regard, suitable notification may be issued by the Railway Board.

* Revision of distance based concession for transporting coke & coal:

At the advent of pandemic situation, concession in rail freight rate for transportation of coal had been urged upon. Distance based concession has been allowed above 1400 kms.

This customer friendly initiative of distance based graded concession of 20% on Normal Tariff Rate (NTR) for transportation of coke & coal for distances above 1400 kms will only be beneficial to a handful of long-distance consumers. Hence, request has been made to provide the same concession for transportation coke & coal for a distance of more than 500 kms.

* Payment of refund against freight through e-payment:

The consumers have to wait till the annual accounts reconciliation of Railways for receiving any payments arising out of diversion / refund /credit of the balance etc which leads to financial loss for them.

Request has been made for considering immediate refund against freight through e-payment

* High under-loading of rakes for imported coal transportation: Imported coal cannot be loaded up to the full chargeable capacity of a wagon as it is low in density due to considerably lower ash content compared to domestic coal. This leads to huge under-loading charges in transportation of imported coal.

The Railway authority is requested to undertake load ability test in case of imported coal and ensure that maximum possible weight of coal could be loaded based on the average density of imported coal.