Coal India to give up Rs 2,865 crores for whom?
26 July 2014 6:05 AM IST
Power & coal minister Piyush Goyal’s decision to not sell coal through e-auction will take away Rs 2865 crores from the profit of PSU Maharatna Coal India Ltd (CIL). Around 52 million tonnes of coal that CIL sells through e-auction helps them to earn them 40% more than the notified price of coal.
But which power company this coal will be diverted to has created a major controversy. According to its own distribution policy, approved by the coal ministry, CIL cannot give coal to any thermal power plants which does not have back to back power purchase agreement with the respective state electricity board or state government. Without PPA, according to ministry sources, CIL cannot sell any coal to any power company as there is a fear of diversion of coal to black market.
In all fuel supply agreements, which CIL has already signed, there is no contractual default. There are some cases where CIL is not supplying coal which maybe because of payment default. CIL officials are not ready to accept that they have defaulted in any contractual obligation.
CIL sells only that quantity of coal through e-auction which they are unable to sell through fuel supply agreements. So, it is not very clear to whom the minister is directing to sell this quantity of e-auction coal. Many state governments like Maharashtra, Gujarat and Rajasthan have stopped taking enough quantity of coal from CIL but are taking it from Adani Group through import route.
But a few months ago, CBI’s action against imported coal has exposed a major scam that a huge quantity of imported coal has a prescribed calorific value deficiency. CBI alleged that even though the tender condition was to supply 5600 calorific value of coal but what was supplied was even less than 4000 calorific value. But some people still favour imported coal as it brings ‘value’ to selected individuals. But being a listed company, whether the independent director of CIL board would accept the directive of the minister or not is to be seen.
Power ministry has confirmed that CIL is already fulfilling its contractual supply obligation to NTPC but because of weather conditions, requirement of power has gone up and that is why the requirement of coal has gone up for NTPC which is not CIL’s fault. He also admits that out of 25 power plants, which has critical coal supply problems, only 6 belongs to the public sector NTPC.
The rest 19 are of private sector companies which don’t have power purchase agreement with respective state electricity boards or any other power buying companies. Some of them are also merchant power companies which sells power at an exorbitant rate.
So, taking away profit from public sector companies and subsidising private companies have created a flutter in the political circle.
But which power company this coal will be diverted to has created a major controversy. According to its own distribution policy, approved by the coal ministry, CIL cannot give coal to any thermal power plants which does not have back to back power purchase agreement with the respective state electricity board or state government. Without PPA, according to ministry sources, CIL cannot sell any coal to any power company as there is a fear of diversion of coal to black market.
In all fuel supply agreements, which CIL has already signed, there is no contractual default. There are some cases where CIL is not supplying coal which maybe because of payment default. CIL officials are not ready to accept that they have defaulted in any contractual obligation.
CIL sells only that quantity of coal through e-auction which they are unable to sell through fuel supply agreements. So, it is not very clear to whom the minister is directing to sell this quantity of e-auction coal. Many state governments like Maharashtra, Gujarat and Rajasthan have stopped taking enough quantity of coal from CIL but are taking it from Adani Group through import route.
But a few months ago, CBI’s action against imported coal has exposed a major scam that a huge quantity of imported coal has a prescribed calorific value deficiency. CBI alleged that even though the tender condition was to supply 5600 calorific value of coal but what was supplied was even less than 4000 calorific value. But some people still favour imported coal as it brings ‘value’ to selected individuals. But being a listed company, whether the independent director of CIL board would accept the directive of the minister or not is to be seen.
Power ministry has confirmed that CIL is already fulfilling its contractual supply obligation to NTPC but because of weather conditions, requirement of power has gone up and that is why the requirement of coal has gone up for NTPC which is not CIL’s fault. He also admits that out of 25 power plants, which has critical coal supply problems, only 6 belongs to the public sector NTPC.
The rest 19 are of private sector companies which don’t have power purchase agreement with respective state electricity boards or any other power buying companies. Some of them are also merchant power companies which sells power at an exorbitant rate.
So, taking away profit from public sector companies and subsidising private companies have created a flutter in the political circle.
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