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Energy giants CIL, NTPC spar again

After slugging over the trigger level in the new Fuel Supply Agreements (FSAs), the two have entered into a blame game over Merry-Go-Round (MGR), a method of dispatch

Sudheer Pal Singh  |  New Delhi 

The battle between the energy sector’s two giants, both government-owned, Coal India Ltd (CIL) and power generator NTPC, does not seem to be ending.

After slugging over the trigger level in the new Fuel Supply Agreements (FSAs), the two have entered into a blame game over Merry-Go-Round (MGR), a method of dispatch.

While CIL managed to pull up production by 4.5 million tonnes (mt) to 435.8 mt in 2011-12, the world’s largest coal mining company missed its target for dispatch of the fuel by 16 mt, sending 432 mt against the 448 mt planned. A major reason was the problem in dispatch through the MGR system run by NTPC at its plants, CIL contends.

MGR is one of the three major methods of dispatching coal to large consumers like NTPC, apart from the railways and roads. A captive rail system connects NTPC plants with their linked CIL mines, typically covering five to 10 km. The system is developed, owned and operated by NTPC.

“NTPC placed less MGR rakes at its Talcher Super Thermal Power Station (STPS). There were unloading problems at the Kahalgaon power plant, too. Also, the MGR offtake of Northern Coalfields Ltd (NCL, a CIL subsidiary) was affected due to an agreement between NTPC and the railways for operating bottom opening rakes. NTPC has also been giving preference for unloading imported coal rakes, adding to the problem,” a senior CIL executive told Business Standard.

While the 3,000-Mw Talcher STPS in Odisha is linked to the mines of Mahanadi Coalfields Ltd (MCL), another subsidiary of CIL, the 2,340-Mw Kahalgaon plant in Bihar gets fuel from the linked mines of Eastern Coalfields Ltd (ECL, another CIL arm).

The Coal India executive said consumers preferred Bottom Opening Box Rakes (BoBR), as their handling was less clumsy. Coal carried in BoBR rakes can be unloaded by merely opening their bottom faces, unlike traditional rakes which either open sideways or have to be turned upside-down to unload. NTPC’s agreement with Indian Railways for BoBR rakes has led to reduced availability of the MGR track for movement of MGR rakes, CIL contends.

It also complains that NTPC gives preference for unloading imported coal rakes, as the smaller size of imported coal makes emptying of such rakes easier. Imported coal has an average size of 50 mm as against the 250 mm size of Indian coal, which is often mixed with large chunks of stone. “The problem is that these plants were originally set up keeping MGR in mind. Now, when all the wagons reach the unloading point at the same time, preference is given to those which are easy to handle,” the CIL executive said.

A senior official from NTPC Ltd completely rejected Coal India’s claims and blamed the mining company for allegedly causing congestion on rail tracks as a result of its failure to develop mines linked to NTPC plants. “Mines linked to Kahalgaon are only partly developed. As CIL is not able to pump enough coal from its linked mines through MGR, they divert supply from other coalfields. So, we have to depend on either the railways or bring imported coal to meet the rest of the supply,” a senior NTPC executive told Business Standard.

The executive insisted there had been no problems in unloading coal at Kahalgaon or Talcher and rejected any preference for imported coal. “We have to use imported coal only to supplement our supplies. If CIL had given us enough linked coal, why would we have to use imported coal?” he asked.

The two energy giants have a history of bitterness. Historically, the two sides have disagreed on the issue of trigger levels in FSAs, the level of supply commitment below which the supplier pays a penalty. In June, constraints in production had led CIL to refuse signing of new FSAs with a trigger level of 80 per cent of contracted quantity. NTPC had insisted on keeping the FSAs unchanged, arguing those for expansion plants could not be different from the ones already in place. The protests by NTPC and other power against CIL’s move to raise coal prices earlier this year had led to a roll back of the increase.

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First Published: Mon, September 24 2012. 00:23 IST