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MahaGenco takes Coal India, arm to competition tribunal

Seeks Competition Commission of India probe into ?abuse of dominance? by CIL, Western Coal Field

Sanjay Jog  |  Mumbai 

Coal India’s “dominant and monopolistic” position in relation to production and supply has been challenged at the Competition Commission of India (CCI). The Maharashtra State Power Generation Company (Maha-Genco) has complained to the country’s apex competition regulator, pressing for an investigation against the Kolkata-headquartered Maharatna for “abuse of dominant position”.

In its petition, MahaGenco says the mining entity’s alleged misconduct can be “established” at two levels. One, at the time of executing a contract for coal supply, and, two, while implementing the terms of any contract and effecting supply to the beneficiary thereunder.

The state-owned power generating company, India’s second-largest, has made CIL and its subsidiary, Western Coalfields Limited (WCL) respondents in its petition.

MahaGenco managing director Subrat Ratho confirmed the 2005-founded company having moved the CCI against CIL, the world’s largest coal miner. “In our petititon, we have submitted that CIL’s abuse of its dominant position takes place when coal companies become reckless and consistently supply inferior-quality coal to the detriment of the purchaser,” he told Business Standard.

“The FSA (fuel supply agreement) does not protect the purchaser on the issue of poor quality of coal.”

As much as 1,02,863.38 Mw electricity generated in the country is based on coal, according to Ratho. “This is 84 per cent of the total generation capacity,” he added. Maha-Genco produces 63.4 per cent of the total amount of electricity generated in Maharashtra.

The power produces argues that it is not any commercial activity that has helped the country’s top coal companies vest a dominant position in the market. “Rather,” Ratho claims, “they have acquired it by virtue of a statutory scheme and the policy of the (Union) government.”

What MahaGenco now wants CCI to do is examine whether the country’s dominant coal companies are abusing their position, and whether the power generators have a resultant prejudice in favour of entities like CIL and WCL. It has stressed the need for an investigation into the general body of consumers in India. “The contracts under which coal is supplied has to be examined so as to protect the interest of the power generators and the consumers,” Ratho notes.

CIL and WCL, both founded in 1975, have “abused their dominant position” to make huge profits at the cost of electricity consumers, according to the MahaGenco petition. The 2010-11 report published by WCL says the Miniratna CPSE that owns 84 coal mines in Maharashtra and Madhya Pradesh had achieved its highest turnover of Rs 7,033 crore, registering an increase of Rs 325 crore over the previous year’s Rs 6,747.63 crore.

Further, MahaGenco says the instance of abuse can be reckoned from the “lopsided and redundant” process of joint sampling provided under the FSA. Joint sampling is a “sacrosanct” right of the purchaser, in order to verify and examine as to the certainty of the quantity and quality of the coal supplied to it, it notes.

“In the absence of proper protocol of joint sampling, there are chances of degradation of the quality of coal, including the size of coal and physical quality,” according to the petition. “Denial of such right directly or indirectly would lead to the effect of frustrating the objective with which the FSA has come into existence.”

MahaGenco has prayed that Coal India and WCL be asked to instal adequate number of auger sampling machines to ensure adequate mechanisation of the collection and sampling.

The two top companies should also be asked to instal adequate number of crushers to ensure that the coal was crushed to the size of 250 mm as required under the FSA. Also, they should be asked to set up adequate capacity for working coal the earliest, adds the petition.

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First Published: Mon, June 25 2012. 00:49 IST
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