CIL to continue 50% supply; NTPC says generation to pick up

The Coal Ministry Friday assured that half of fuel supply to NTPC would continue for the time being while the power producer said generation will pick up gradually.

Updated: Apr 05, 2013, 21:26 PM IST

New Delhi: The Coal Ministry Friday assured that half of fuel supply to NTPC would continue for the time being while the power producer said generation will pick up gradually.

The development comes amidst feud between Coal India and NTPC over quality of fuel being supplied. The situation got aggravated after NTPC lowered generation saying supply from CIL was of poor quality and inadequate, stoking fears of power cuts ahead of peak summer.

State-run power generator NTPC has refused to sign fuel supply agreements with Coal India (CIL) as it feels the fuel being supplied is of poor quality.

"The supply (of coal by CIL to NTPC) has not been discontinued. CIL had taken a decision. But the instructions have been sent by our ministry (to CIL) that for the time being at least 50 percent of supply should continue," Coal Minister Sriprakash Jaiswal said when asked about switching off supply to NTPC.

When contacted, an NTPC spokesperson said, "Partial supply of coal at the power stations has started and generation will pick up gradually."

Sources in the Coal Ministry said that the power firm has outstanding dues worth over Rs 2,200 crore, as on March, this year, to Coal India.

Jaiswal said: "In the meantime after having talks with NTPC, the dues will be recovered."

Meanwhile, The Children's Investment Fund Management (TCI) -- the UK-based minority shareholder in CIL -- has asked directors to take steps for removal of Coal India's CMD in order to run the company efficiently.

"If the current CMD is not able to provide solutions to these problems, then it is incumbent on CIL's other directors to remove him from office and take appropriate steps to have him replaced with someone who is able to run the company efficiently," TCI said in a letter to CIL directors.

"It is extremely bad management to allow such a key customer to become so greatly dissatisfied," TCI said on NTPC's refusal to sign FSAs over quality issues.

NTPC buys close to 140 million tonnes of coal to fire its thermal power plants. While most of CIL's customers have signed on dotted lines, NTPC has not signed FSA for 4,500 MW power generation capacity.

Shares of NTPC fell by 2.42 percent to close at Rs 140.85 apiece, while Coal India settled marginally down at Rs 308.50 apiece.
On quality of coal being supplied to NTPC, Jaiswal said:
"We are ready for third party inspection (of coal) but at the loading point ... But we are not ready for third party inspection at receiving point (of coal)."

Replying to another question, he said: "There are few issues (with regard to FSAs) which would be resolved."

Power Secretary P Uma Shankar had also said that his ministry and Coal ministry should be able to solve the problem amicably.

Coal Secretary S K Srivastava while speaking with reporters here said that Coal India supplies that whatever quality of dry fuel is extracted from the mines.

"We will be able to supply that coal which comes out of the mine. Whatever is the grade of coal, we supply that," Srivastava said.

NTPC has claimed that its power plants require coal of minimum 3,100 kilocalories but what Coal India is supplying is about 2,100 kilocalories. The company has said it impacts the equipment used in the plant.

The Prime Minister's Office is pushing CIL to sign FSAs for supply of a minimum threshold of coal to power producers but NTPC feels the world's largest coal producer was supplying "rocks and boulders" just to meet its supply commitment.

NTPC said the company has resolved all the issues with CIL and the only matter coming in the way of signing the FSAs is "poor quality" coal.