'Panel to resolve coal quality issue at variance with FSA'

The proposal to form the committee comes in wake of differences between CIL and NTPC over quality of coal

Amid the CEA proposing to form a panel to look into issues with regard to quality of coal being supplied to power utilities, the Coal Ministry has opposed it saying it is at variance with the already laid down system under the fuel supply pact.

"The proposal of CEA (Central Electricity Authority) for constituting a committee to assess the sampling and testing facilities would apparently be at variance with the already laid down system and procedures under FSA (Fuel Supply Agreement)," Coal Additional Secretary A K Dubey said in a letter to CEA Chairperson A S Bakshi.

The proposal to form the committee comes in the wake of differences between Coal India (CIL) and NTPC over the quality of coal being supplied to the power PSU.

Dubey further said that the coal is being supplied under a legally enforceable FSA and any dispute with regard to supply of coal under the fuel supply pact has to be resolved through resolution mechanism provided in the agreement itself.

"Supply of coal under FSA mechanism provides for joint sampling and analysis at loading end with a mechanism for resolution of disputes on quality issues, if any, through analysis of referee samples. CIL has informed that NTPC has stopped participating in joint sampling process since January, 2013," the letter said.

Dubey added that while the objective of the proposed panel is to resolve the differences between the coal firms and power utilities with regard to coal quality, supply etc. In place of the already provided dispute resolution mechanism under FSA, CIL has major issues like payment default, huge outstanding payment etc, with thermal power plants.

"As on date over Rs 8,600 crore has been unilaterally held up by power companies in violation of the provisions of the FSA," the letter said.

Dubey further said that a decision has been taken to conduct third party sampling of coal supplies and CIL has already given a deadline of September 30 to implement it.

"In the interim, CIMFR (Central Institute of Mining and Fuel Research) is doing independent sample analysis. Therefore, CEA may also consider whether this exercise is required at all," Dubey added.

Coal India's subsidiary Eastern Coalfields Ltd had last month discontinued the coal supplies to NTPC for a few days after the power producer refused to honour bills saying that the quality of fuel supplied was not up to its satisfaction.