Consumers' Page

Present Coal Scenario:

India’s total coal production has grown from 66.58 MT in April ’22 to 71.30 MT in May ‘22, registering a growth of 7%. Total coal production in FY 22-23 so far has increased by 31.5% compared to the same period in last fiscal. CIL’s production has grown by 3.9% on an m-o-m basis in May and over 30% compared to the same month last year. Overall coal despatch in the first two months has grown by 12.65% compared to the same period in FY 2021-22 while CIL’s despatch has increased by over 8.5%. Lion share of the coal is being despatched to Power Sector to cater to the soaring demand. So far in this fiscal, coal despatch to power sector has grown by 19.5% compared to the previous financial year. Along the industrial sectors, only despatched to Steel Sector has increased (26%) in FY 23 while other sectors have dipped significantly. CPP Sector has been most severely hit as supply of coal has dipped by nearly 32%.

Issues faced by both Power and NRS Consumers:

1. Submission for release of various forms of long-pending refunds from South Eastern Coalfields Limited (SECL) and MCL:

Various forms of refunds from South-eastern Coalfields Limited (SECL) including refund of additional coal value advance, BGs related to financial coverage and performance security, pending credit notes on account of grade slippage, refund of security deposit against expired FSAs etc. are pending since many months. Among all CIL subsidiaries, the amount of pending refund from SECL is the highest so far. In case of strapped BGs consumers are unable to secure required credit limits from their Banks to carry out regular plant operations comfortably. As a result, huge amounts of funds of both Utilities and Industries are stuck with MCL. Requests have been made to SECL, MCL and CIL to immediately start processing the long-pending refunds to the Power and Non-power sector consumers. Both SECL & MCL have started streamlining the refund procedure.

2. Submission for coal consumers across the board for extension of empanelment period of QCI as Third-Party Sampling Agency:

As requested a number of member companies availing services from Quality Council of India (QCI) to extend the empanelment period of Quality Council of India (QCI) as the third party sampling agency (TPSA) that was going to expire on 25.05.2022, request has been made to MoC and Coal India Limited regarding the same. CIL has extended the period of empanelment of QCI by a year till 25th May 2023 at Rs 6.00 / tonne.

3. Submission to SECL regarding continuation with single LC against coal supply through Rail and Road mode:

So far, the consumers had to provide a single Letter of Credit (LC) for the entire supply irrespective of the mode of dispatch. However, as per instructions given by SECL, separate LC needs to be issued for separate modes of dispatch (Road or Rail mode). Many consumers have to avail both modes of transport (Road/Rail) for convenience of coal supply at their respective plants. Hence, issuance of separate LC for separate modes would be financially difficult as well as cumbersome for them. Request has been made to SECL to continue with the provision of a single LC for entire supplies irrespective of mode of dispatch (Rail/Road) to the respective companies.

4. Submission for roll back of hiked price in different grades of coal by SCCL effected from 01.06.2022:

The basic prices of different grades of Run Of Mine (ROM) coal for Power Sector has been hiked seven times and for Non-power Sector six times by SCCL since August ’21. The prices of washery grade coal have also been hiked four times by SCCL during the aforementioned period. Also, Additional Facility Charges from specific shipping points and Explosive Cost Adjustment Charges were introduced while Fuel Surcharge has also been hiked multiple times. Request has been made to SCCL so that that coal prices notified by SCCL on 01.06.2022 may be rolled back and levied additional charges on coal may also be reduced to the extent possible.

Issues faced exclusively by Power Sector Consumers:

5. Submission by Power Sector for loading of rakes as per trigger level MSQ:

Power Sector consumers have pointed out that supply of rakes from ECL to their company have been significantly lower than the trigger level MSQ in recent months despite already paying up the full coal value advance worth crores of rupees. Restriction/curtailment of loading of rakes programmed as per trigger level MSQ during a month leads to accumulation of backlog rakes which need to be loaded in the subsequent quarters. This may lead to levy of short-lifting penalty on the consumers at the end of the year as procuring such a large number of rakes may not be possible at that point. Request has been made to ECL and CIL to ensure loading of rakes as per trigger level to the Power Sector so that coal requirement by the Utilities may be fulfilled.

6. Submission by Power Sector for immediate release of long-pending eAuction rakes booked under Special Forward e-Auctions:

In spite of ensuring steady supply of FSA rakes from CIL Subsidiaries, a large number of e- Auction rakes are pending for a long time from various coal companies. For instance, supply of 560 rakes booked under Special Forward e-Auction (SFEA) have been halted from MCL’s Talcher area alone, Some of which are pending since September 2021. This pendency is leading to an acute coal crisis across the power plants. Request has been made to Ministry of Coal, Power and CIL to ensure liquidation/materialization of SFEA rakes may be conducted through allotment of prorata quantity in the tune of 10%-20% of the total number of rakes despatched per day by MCL and other Subsidiary coal companies as well.

Issues faced exclusively by NRS Consumers

6. Submission by Industries to immediately improve supply of rakes from MCL:

MCL has dispatched 8.4 rakes to the Non-power sector per day on an average in March '22 which was only 9.6% of total rake dispatch by MCL. It is also lower than the average daily despatch in the same month last year despite the current pendency of over 1000 rakes for the NRS consumers from the coal company. Request has been made to MCL and CIL to immediately increase the number of rakes supplied to the Non-power Sector.

7. Prayer by the Industries (including CPPs) seeking support to improve coal supply situation:

CIL Subsidiaries are allocating coal to the NRS consumers at trigger level {75% of the Monthly Scheduled Quantity (MSQ)} under Fuel Supply Agreement (FSA) since February, 2022. Though FSA quantities are not being supplied to the Industries, the coal companies are successfully conducting Spot E-auctions where the spot prices have scaled up to manifolds (around 800% above notified price) since March’22. Also, the continuous process plants are compelled to purchase power from the exchange while keeping their CPP units almost idle which is causing power demand and tariff to increase further. A list of submissions have been made to the Ministries of Coal, Power, Finance, Industries as well as CIL to supply coal to the NRS as per MSQ instead of restricting it to trigger level, increase despatch to NRS via Rail mode immediately, Capping spot auction prices at a certain limit till normalcy in supply resumes, supply adequate quantities to CPPs to generate at full capacity as it would allow excess power to be transmitted to the grid, consider inter plant transfer of coal within the same group company that have multiple plants with separate linkages, in case of unavailability of rakes allow change of mode from Rail to Road etc.

8. Submission by NRS FSA consumers for not taking advance payment of more than one month MSQ

Due to scanty supply of NRS FSA rakes, advance amounts paid by the consumer, equivalent to Scheduled Quantity of multiple months are stuck with the coal company. Under the ongoing high-demand scenario, due to non-supply of FSA quantities, NRS consumers are compelled to procure coal via e-Auctions by paying premiums which are several times higher than the notified price or source coal from imported sources at a higher price. Therefore, blockage of fund is an added financial burden on them. Request has been made to CIL so that supply of rakes to the NRS consumers could be expedited by the Subsidiaries and advance payment to be made by NRS consumers to the Railways may not be higher than coal value equivalent to MSQ of one month.

9. Submission by NRS Consumers regarding refund of EMD, Royalty and Ad-valorem taxes against lapsed DO quantities:

Industries securing coal under Spot e-Auctions from SECL’s Chhal, Bijari OCP in 2021, could not procure the allotted quantities due to various reasons such as non-availability of designated grade of coal (G-10, G15), frequent breakdown of weighbridges, irregular movements of loading vehicles, poor coal evacuation arrangements etc. As a result, only a small portion of the allotted DO quantities could be lifted by these Industries and the rest quantity got lapsed despite high coal demand. However, the EMD amount submitted by the consumers has not been refunded for many months. For certain NRS consumers, coal value against the lapsed DO quantities has been refunded by SECL but Ad-valorem charges including Royalty, DMF, NMET, AVAP taxes deposited alongwith coal value has not been refunded. Request has been made to SECL and CIl to expedite refund of EMD, Royalties and other Ad-valorem charges against lapsed DO quantities.

10. Submission by NRS consumers for revalidation of lapsed rakes from East Coast Railways:

As per NRS consumers procuring coal through Exclusive e-Auction from MCL’s SPUR I & II sidings have stated that the quota of 78 rakes allotted to them for January’22 has not been sanctioned in spite of completing all payment formalities such as submission of coal value, C Form at FOIS etc. As per the letter issued by MCL dtd 17.05.2022, the rakes allotted to the Industries have been offered for timely allotment to East Coast Railways (ECoR). But a significant number of rakes are not given allotment by ECoR which has led to lapsing of those rakes. As the offer-allotment of rakes needs to be completed within the validity period of the sanctioned rail programme and there is no separate provision of reindenting the rakes. Request has been made to ECoR and the Railway Board to allow revalidation of the lapsed rakes so that the quantities may be supplied to the NRS consumers.