6 minute read
Consumers' Page
Common concerns faced by both Power and Non-Power sectors:
1. Suggestions from consumers’ end towards import substitution:
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z Presently per unit energy cost from domestic coal is not commensurate with the energy cost from imported coal. This might interest coal consumers to depend on imported coal more as global coal price has crashed following the worldwide outbreak of pandemic this year. Under the current situation, consumers have suggested for certain measures to reduce domestic coal price including charges applicable later like withdrawal of Evacuation Facility Charges and Surface Transportation Charges (STC) for distance of 0-3 kms. Consumers still face the issue of grade slippage in domestic coal from various subsidiaries despite several measures by the government to eradicate this problem.
z It is strongly urged that domestic coal price is commensurate with GCV as received at the plant end.
z In order to bring in more transparency and consumer satisfaction, coal consumers have appealed for an option to choose Third Party Agency for coal quality assessment.
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Coastally located plants opt for imported coal as ocean freight is significantly reasonable for them. In order to curb the coal sourcing from imported origin, CIL may consider introducing alternative modes of transportation including a combination of Rail/Road and Waterways. CIL may also strengthen logistical parameters and better evacuation facilities to ensure uninterrupted supply of coal.
2. Time bound release of pending credit notes and refund of statutory charges:
Coal companies are liable to issue credit note within seven days of receipt of quality analysis (third party / referee / jointly signed) results. However, in reality credit notes to be issued by Subsidiaries have been pending for even more than one to two years in many cases. Also, the credit notes are issued to the extent of difference in the Base Price of declared grade and analysed grade of coal. However, differential statutory charges like GST, Royalty, DMF, NMET etc are not refunded. Coal companies are requested to ensure issuance of credit notes within given timeline of FSA in case grade slippage is confirmed. The concerned authorities have been requested to ensure inclusion of suitable clause in the FSA provisions regarding refund of pro-rata statutory charges.
3. Request for Change in Modalities of Usance LC :
In cases of Linkage/Exclusive/Special Forward Auction by Road mode, it is required by the successful bidder 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 advance in cash/RTGS. A) 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. B) It has been also pointed out that discounting charges of Usance on imported coal is nominal (0.1%) compared to the discounting charges (8-9%) to be borne by consumers for procuring coal from CIL sources which will make domestic coal costlier.
4. Requests by both the sectors for announcing auction details in advance:
The consumers from both Power and Non-power sectors have appealed to the concerned authorities to kindly announce the quantity, grade and source of coal to be offered in the upcoming auctions far in advance so that it becomes easier for both the utilities and industries to plan their entire operations in a befitting manner.
5. Request for not imposing penalty for Non-lifting/short-lifting during lock down period:
During the lockdown period, Power Plants and Industries have been operating under a lot of restrictions, scarce workforce and truncated capacity due to subdued demand. Therefore, the Consumers across the board have requested that no penalty should be imposed for Non-lifting or short-lifting of quantity against FSAs during this period.
6. Deemed delivered quantity:
As per the Rakes Carry forward SOP, a consumer can re-indent for the lapsed rakes for the next 3 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.
7. Request for supplying coal more than ACQ without levying PI:
The Power Plants that are running with high PLF, have requested CIL to consider supplying coal beyond their annual Contracted Quantity without levying any Performance Incentives (PI).
8. 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. Higher grade coal pushes up the generation cost, thereby making thermal power prices uncompetitive.
The Power sector consumers have requested 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.
BCCL re-graded some of the mines from noncoking to washery grades W-V & W-VI. Power plants are finding the usage of this washery grade coal unviable due to its high price difference with non-coking grade with the same GCV value.
Though BCCL slashed down its prices of washery grades IV, V & VI by an average of 10% in May, 2020, the Power plants are still struggling to procure coal as per their MSQ due to the current cash crunch. Request has been made for further reduction of price of BCCL washery grades IV, V & VI wherever possible. Consumers have also requested to fix the price of washery grade coal for power users on As-received GCV basis (ARB).
10. Request for refund of differential GST amount by NCL in case of grade slippage:
Some of the CIL subsidiaries are already refunding the differential GST amount to their customers. However, according to some Power sector consumers procuring coal from NCL, the Credit notes issued by NCL does not include the amount for difference in GST. The NCL authority is requested to process refund of differential GST amounts in line with the other CIL Subsidiaries.
11. Appeal for immediate settlement of long-pending refund cases of IPPs from CCL:
A number of Power Sector consumers (IPPs) procuring coal from CCL, have large amounts of refund pertaining to excess coal value, pending for settlement for several years which is leading to blockage of funds at this crucial juncture. The affected consumers have requested the concerned subsidiary to settle all the pending refunds without further delay.
Issues faced exclusively by NRS consumers:
12. 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. It is requested that notified price of coal for NRS consumers be brought at par with the price for Power sector consumers as it may prompt the NRS consumers to choose domestic coal over imported coal.
13. 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.
14. Request for clubbing of contracts for large-scale NRS consumers:
Major plants from the Non-regulated sector have large number of FSAs with the CIL subsidiaries. This compels the bigger entities to provide a substantial amount of working capital for payment of advances to the coal companies for existing FSAs. Amendment in FSA provision through change of respective policy guidelines is requested for Subsidiary-wise clubbing of contracts so that cash along with BG and LC are consolidated for operational convenience of the consumers as well as the coal companies.
