It was an unilateral decision of NTPC. Beginning September 2012, the power major simply trashed the laid down procedures of joint sampling and started paying coal companies – namely Eastern Coalfields and Northern Coalfields – at the lowest possible rates.

The stand-off reached a new high earlier this week, when the BIFR-listed Eastern Coalfields stopped supplies to two NTPC plants – Farakka and Kahalgaon – in Eastern region, for non payment of Rs 1,000 crore dues.

On the back of widespread concerns of a blackout, the Coal India Limited subsidiary resumed half of the promised supplies beginning April 4 but on condition that NTPC should participate in sampling (both mine and the plant-end).

The results are interesting. On April 4, the measurement at NTPC end showed nearly 100 kcal a kg higher GCV (gross calorific value) value of 4,000 than the mine end. On April 6, the despatch was of even better quality of 4,345.

But, it also trashes NTPC’s claim that the supplies are substandard and deserves the price of rejects (2,201-2,500 kcal) at Rs 360 a tonne, as was forwarded to ECL for last six months.

There is something more interesting to the story: the two NTPC plants were sourcing coal from the same mines for decades and that too at 26 per cent higher price of Rs 870 a tonne till Jan 2012, when coal ministry pushed CIL to switchover to internationally accepted GCV norms.

The coal ministry’s decision caused heartburns in power ministry. And, since then NTPC was found to be not merely at loggerheads with CIL on a range of issue but, often kept dragging such issues – as in the case of fuel supply agreements (FSA) – for too long.

There are also instances of NTPC disregarding its own commitments (on FSA) to mitigate differences.

Strikingly there were not many complaints on quantity . And, unofficial estimates suggest, except in two generation facilities (facing logistics related issues) NTPC is blessed with adequate domestic supplies.

Quality, on the other hand, became a bone of contention for signing FSA.

Apparently, NTPC is within its rights in demanding better quality of supplies. It is also true that miners such as ECL have sufficient scope to improve on that front. But, it is debatable, if NTPC should take unilateral measures. The company didn’t answer nearly a dozen of letters from the miner to settle the dispute.

It is also debatable, if the power major can procure ‘stones’ at Rs 360 a tonne – is offered to ECL.

For records, Singareni Collieries (SCCL) charges Rs 420 a tonne for coal rejects. And for the specific grades, as consumed by Farakka and Kahalgao, SCCL charges nearly double the price. Should NTPC offer the same price to CIL, if the miner improves on quality?

(This article was published on April 7, 2013)
XThese are links to The Hindu Business Line suggested by Outbrain, which may or may not be relevant to the other content on this page. You can read Outbrain's privacy and cookie policy here.