CONSUMERS’ PAGE

Issues Faced by Power Sector

Consumers:

1. Submission by Power Utilities in North India for considering shortest distance between NCL and powerplants

as rationalized distance:

Some of the power plants based in northern India (Punjab, Haryana, etc.) having coal linkage from Northern Coalfields Limited (NCL) have pointed out that the distance through the shortest railway route from NCL sidings to their plants in north India is actually much lesser than the distance for which freight is charged by Indian Railways as per notified rationalized route. In some instances, the difference between the shortest distance from the cluster of NCL command area sidings to these power plants and the distance as specified in the rationalized route is about 200 kms.

While practically most of the rakes are being routed through the shortest route only, the freight is still being charged as per the notified rationalized longer route by the Railways, leading to higher freight charges of around Rs.300/tonne in some cases.

Request has been made to the Railway Board to review the current notified rationalized distance originating from NCL command area sidings to the north-Indian power plants and revise the rationalized route to the shortest distance through which most of the rakes are being transported by railways and determine freight charges accordingly.

2. Submission by Power Sector consumers for not levying penal charges for load adjustment of rakes due to overloading:

The Bilaspur Division of SECR has imposed 6 (Six) times penal detention charges i.eRs. 53,100/- per hour from 25.12.2022 for load adjustment of rakes in case of overloading instead of Rs. 8,850/- per hour of standard demurrage charges. It is requested that such a huge penal charge may not be levied and standard detention charges may be imposed by the railway division in case of overloading of rakes.

As loading of rakes is the responsibility of the coal companies and the consumers do not have any role in the rake-loading process, demurrage charge is ideally payable by the coal company. Therefore, in case of overloading of rakes, if additional time is required for load adjustment, then the detention penal charge should also be borne by the coal company itself.

Request has been made to Railway Board, SECR and CIL that Consumers may not be penalised in case of overloading of rakes by levying rake detention charges on them for load adjustment.

3. Submission by Power Sector requesting refund of Ad-valorem charges in credit notes against grade slippage:

A number of Power Sector consumers have pointed out that Ad-valorem taxes such as Royalty, DMF, NMET, etc. paid by them along with advance coal value are not included in the credit notes issued by respective coal companies. It may be noted that combining all the ad-valorem taxes amounts to a significant portion of the total coal cost paid by the Power Generators towards procurement.

Request has been made to MoC so that all CIL subsidiaries may include these amounts related toRoyalty and Ad-valorem taxes during the issuance of credit notes against grade slippage.

Issues Faced by Non-power Sector Consumers:

4. Comments and views given by NRS Consumers on Tranche-VI NRS Linkage Auction:

The following submissions were made to CIL based on comments and suggestions given by member companies from Non-power Sector:

*Indexing of basic price of coal:

The base price of coal in Tranche-VI NRS Linkage Auction will be linked with Wholesale Price Index (WPI)from 1st April every year starting with 1st April, 2023.It is requested to consider keeping the basic price of coal at 15% of the Wholesale Price Index (WPI). Also, that in case of a change in index price, the lower limit should be kept at 10% of the prevailing base price in tune with the upper cap of 10% so that uniformity is maintained.

*Extension of FSA tenure:

CIL has proposed to extend the FSA tenure for another five years if any consumer can establish the captive mode of transport (except via Road mode), capable of transporting 80% of the FSA quantity but the consumers have opined that that developing 80 % captive transportation capacity is a steep target which may attract limited interest from the consumers and it also involves huge capital investment. It is requested that the target to develop captive transport capacity may be reduced to 20% of the FSA quantity at least for Tranche-VI. Also, the consumers may be given 10% discount on coal price rather than levying 10% facilitation charge over the basic price of coal.

*Review of the proposal for limiting the validity of allotted rakes to 90 days:

CIL has proposed to limit the validity of allotted coal rakes to 90 days from the date of allotment for the rakes booked under the Tranche VI linkage auction & onwards. However, it has been noticed that on many occasions, supply of the allotted quantity is taking morethan 180 days for Rail mode and 120 days for RcR mode. It is requested to continue with the present validity till the time supply situation for Non-power Sector normalises.

*Introduction of two-year lock-in period so that bidder has the option to exit:

As many industries have been allocated coal blocks under either Captive or Commercial Sale regime which are under various stages of development, it is requested that there should be an option to exit from the Linkage FSAs when they achieve peak rated capacities from their mines. Therefore, a two-year lock-in period should be re-introduced for the successful bidders in the upcoming tranche.

*Allow inter-plant transfer of coal:

At present, CIL Linkage quantity is specifically linked to a particular location and end use is defined (Kiln/CPP). It is requested that interplant transfer of coal within the same company/business group (within different units of the same organisation) may be allowed for higher capacity plants in the Non-power sector in line with the power sector.

*Increase offer of coal to Sponge-iron Subsector:

As per the Sponge-iron Sector consumers, offer of coal from different CIL Subsidiaries in the upcoming linkage auction is less than the quantity required for smooth function of their plants.

Offered quantity from ECL is requested to be extended to 5 lakh tonnes.

Offered quantities of coal from Subsidiaries like WCL, MCL, CCL and NCL is requested to be doubled.

5. Appeal by NRS Consumers to increase supply of coal via rail mode:

In spite of noticeable improvement compared to previous months, the coal supply scenario to the Non-power Sector, especially via rail mode, is still languishing far below the required level.

Owing to severe curtailment of coal supply via rakes, many Industries including continuous process plants had to convert the mode of supply from rail to road in order to sustain their plant operations. Converting rail quantity to road offtake may often lead to a higher premium for coal which may be more than the premium paid to CIL for supply via rail mode.

Request has been made to MoC and CIL so that the number of rake supplied to the NRS consumers may be increased at the earliest possible.

It is also requested that in line with the modalities of the mode-agnostic single-window auction, Rail to Road conversion may be considered without change in premium so that the consumers do not have to bear the additional expenditure.

6. Appeal to extend the timeline for last date of sale of tender documents & bid due date by 15-20 days for 16th Tranche of Auction under CM (SP) Act, 2015 and 6th Tranche of Auction under MMDR Act, 1957: were restricted to trigger level (75% of MSQ) for several months. Restrictive supply and lack of supply via rail mode had adversely impacted the plant operation of the industries. cember 2022 onwards:

The last date for sale of tender documents at the MSTC Website was on 9th January, 2023 (Today) and Bid Due Date was on 13th January, 2023 for the16th Tranche of Auction under CM (SP) Act, 2015 and 6th Tranche of Auction under MMDR Act, 1957. However, due to inclement weather conditions and holiday season during December last year, these companies could not undertake the site visits and finalise coal mines/ blocks of their interest within the offered timeframe for submitting the technical bid and initial offer.

Request has been made to MoC and CIL to extend the time schedule of last date for sale of tender documents on the MSTC website as well as Bid Due Date for the auction mentioned above by at least 15-20 days, so that the consumers may have adequate time for site visits and for finalising their preferred mines before participating in the auction.

NRS consumers pointed out that poor-quality coal being loaded from a number of ECL sidings. While the declared GCV of coal supplied via Rail from BKL-1, BKL-2 (Bankola) and POCP1 (Jhanjra) sidings is around 6101-6400 K. Cal/ kg denoting G-4 grade, coal received from these areas is between 4800-5800 Kcal/kg GCV. Also, the fixed carbon content in the received coal is around 38%-42%. Supply of coal which is much lower than the declared grade, is leading to significant financial loss to the industries.

Request has been made to ECL to supply of declared grade of coal from the said sidings of the Subsidiary coal company.

As MCL now has sufficient coal stock, request has been made to the coal company to supply the balance/undelivered contracted quantity (25% of MSQ) from those months (February’22November’22) with a retrospective effect.

9.

Though other subsidiary coal companies of Coal India Limited have already started supplying coal up to 100% of MSQ since last December, SECL continues to supply coal up to 75% of ACQ since February 2022. Restrictive supply and lack of supply via rail mode is adversely impacting the plant operation of the industries procuring coal from SECL.

Though MCL has stated supplying coal to the NRS consumers as per MSQ from December ’22, it is known that coal supply to the industries

Request has been made to SECL for enabling supply of coal up to 100% of ACQ with effect from December 2022 onwards..