Coal shortage, procurement woes cost NTPC Rs 11,000 cr in 2010-16

Government Auditor CAG has found that state-run NTPC shelled out an additional Rs 6,869.95 crore during 2010-16 for procuring domestic coal and missed out on garnering Rs 4,299.80 crore in revenues due to outages at power plants on account of fuel shortage.

Together, it costed the company close to Rs 11,000 crore during 2010-16, CAG noted.

"The company incurred additional expenditure of Rs 6,869.95 crore over 2010-16 in procurement of domestic coal even as it lost an opportunity to generate revenue of Rs 4,299.80 crore due to full or partial outages of stations on account of shortage of coal," Comptroller and Auditor General of India (CAG) stated in its report on NTPC's power plants.

The Performance Audit Report covered fuel management of 13 out of 26 coal-based power stations of NTPC and its Joint Ventures during the period from April 2010 to March 2016.

As per the report, during 2010-11 to 2015-16, 11 out of 13 stations covered, reported a generation loss of 19,546.26 million units with potential revenue loss of Rs 4,299.80 crore.

It said that coal cost constitutes 60-70 per cent of the total generation tariff of coal-based power stations and has significant impact on cost of supply of power to consumers.

CAG took up performance audit of fuel management in coal based power stations of NTPC Ltd.

According to the report, supply of domestic coal to power stations was governed by National Coal Distribution Policy (NCDP) of Coal Ministry. Domestic coal was supplied to power stations by coal linkages established through Fuel Supply Agreements (FSAs) at prices fixed by Coal India Ltd (CIL).

However, it said that inadequate coal linkages of power stations, delay in signing of FSAs and intra-year shortfall in supplies led to procurement of coal at prices higher than the notified rates.

Power stations also incurred additional cost by way of performance incentives even for quantities within Annual Contacted Quantity (ACQ) and on deemed delivered quantities, premium on MoU procurement, e-auction etc, it said.

Besides, the power stations paid performance incentives for additional annual supplies even as they suffered generation loss due to intra-year shortfall in coal supply, it added.

CAG observed that though the company has been importing coal since 2005-06, no comprehensive policy for import of coal was devised resulting in non-uniform decisions regarding splitting of packages among bidders, qualification requirements, re-tendering and annulment of packages.

Imported coal was stored in the same yard along with domestic coal although the former has higher Gross Calorific Value (GCV), which affected the blending ratio of coal, it said

Besides, CAG found that despite very significant quality difference (GCV difference) between domestic and imported coal, the specific coal consumption of the power station was not significantly affected by a change in the quantity of imported coal blended.

It also said that instead of ascertaining transit loss of coal (difference between quantity of coal dispatched from the mines and quantity of coal received by stations) by weighing the railway rakes, an indirect method called 'volumetric method' was used.

There were also concerns regarding accuracy of the stock reported at the stations, considering that some stations reported bigger stocks than the storage capacity of yard, it added.