The Hindu Business Line : NTPC finding it tough to get more supplies from Coal India

Subsidiaries of CIL have pleaded their inability to supply beyond the quantity specified in the fuel supply agreements (FSA) signed in 1999 with NTPC unless the power utility agrees to pay "market driven" prices for the non-specified quantity of coal being supplied to it.

The CIL subsidiaries argue that they have been supplying coal to NTPC beyond the quantity specified in FSAs at subsidised prices, although they are not obliged to do so at the cost of CIL's financial loss.

NTPC sources say they cannot afford to pay higher prices for fuel because they have limited options to pass on the prices.

This is because it sells power at costs determined by the regulatory authority.

NTPC has suggested that coal prices be determined by a regulatory authority instead of by market forces.

CIL has argued that the price of coal, being a commodity, cannot be determined by any such regulatory authority.

A CIL source said that NTPC takes about 85 million tonnes of coal per annum from its subsidiaries, largely from Northern Coalfields Ltd, Mahanadi Coalfields Ltd, South Eastern Coalfields Ltd and Eastern Coalfields Ltd.

Of the total quantity supplied to NTPC, Northern Coalfields alone supplies about 35 mt of coal per annum, its accumulated coal sales dues from NTPC having crossed the Rs 250-crore mark.

The accumulated dues have touched this level because of NTPC's refusal to pay the revised prices.

Available information suggests that CIL has advised its subsidiaries not to supply coal beyond the quantity specified in the FSA unless NTPC agrees to pay higher prices.

The quantity of coal, which can be saved by not dispatching to NTPC, can be sold through the e-auction route to "starved" consumers at very high prices.

The CIL source said that coal companies are ready to cater to NTPC's requirement if better prices are offered. Otherwise, NTPC will have to find out alternative routes such as imports and captive mining. In fact, NTPC has been offered two large virgin coal blocks for captive mining purposes.

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