MahaGenco wants change in fuel supply pacts with CIL, subsidiaries

MahaGenco looses Rs 600 cr on account of quality

The Competition Commission of India (CCI)’s landmark penalising of Coal India (CIL) and three subsidiaries of the latter has vindicated our stand, states the Maharashtra State Power Generation Company (MahaGenco).

The CCI order, of a fine of Rs 1,773 crore on these bodies, was on a petition from MahaGenco. The latter says it shows fuel-supply agreements (FSAs) should cease to be as one-sided as they are at present. And, instead, take into account the concerns of utilities.

MahaGenco’s petition alleged CIL was misusing its monopoly on supply to fix prices and supply product of a poor quality. With a thermal power capacity of 8,000 Mw, it procures 50 million tonnes of coal in a year — from Western Coalfields (22 mt), Mahanadi Coalfields (15.5 mt), South Eastern Coalfields (six mt) and Singareni Collieries (2.3 mt). The first three are CIL subsidiaries. The remaining 3.5 mt is imported. MahaGenco spent Rs 9,138 crore on coal purchase in 2012-13.

MahaGenco managing director Asheesh Sharma told Business Standard '' Our basic stand has been against the quality of coal supplied which has been deteriorating very rapidly. In the earlier system of sampling (before 2009), average of unloading gross calorific value (GCV) and loading GCV was taken. But now only loading GCV is taken.

In the earlier system grade slippage percentage was only 20% to 40% but under the new system it is 100 % .Under the new FSAs, MahaGenco has absolutely no say.'' However, Sharma said only in case of Western Coalfields (WCL), MahaGenco looses about Rs 600 crore annually on account of quality ( extra payment made for coal).

Sharma recalled that recognizing this problem even High court Nagpur has ordered that sampling should be done by a third party and results be submitted to the Court.

Furthermore, Sharma said that quantity of supply is another major area of concern.

''MahaGenco 's total receipt of coal against the linkage is only 67 -70%. If we take the combined impact of quality and quantity then our total heat realization is only 50% of the required quantity for running plants at the efficiency level prescribed by Maharashtra Electricity Regulatory Commission (MERC). The disallowances on account of this is another Rs 600-700 crore per annum,'' he noted.

MahaGenco official said during April-November 2013, the company received 9.90 MT against contracted 14.44 MT from Western Coalfields (69% realisation).

As far as April-October is concerned, MahaGenco received 3.4 MT against 7.5 MT (45%) from Mahanadi Coalfields, .45 MT against 1.13 MT from Singareni Collieries (35%) and 4.2 MT against 3.3 MT (126%).