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ECL supplying inferior coal, but charging higher price: Cement Corp

March 20: The Board for Industrial and Financial Reconstruction (BIFR) referred Cement Corporation of India Ltd (CCI) has alleged that Coal India Ltd's (CIL) subsidiary, Eastern Coalfields Ltd (ECL), is consistently supplying inferior grades of coal to it, but charging higher prices, which is resulting in huge losses to the only government-owned cement-maker.

In a letter addressed to CIL Chairman S Narsing Rao, CCI said that ECL is presently supplying coal with a GCV of 4,000-4,200 Kcal/kg, but billing is being done for 6,200 Kcal/kg. It thus sought the chairman's intervention on the issue.

CCI's Rajban plant in Himachal Pradesh has a fuel supply agreement with ECL for 32,250 tons of coal per annum.

"Up to 2009, the coal was being supplied to the Rajban plant from ECL's underground mines such as Khar Kajora, Parasea, Bankola etc and the average ultra heat value (UHV) of the coal used was 5,500 Kcal/kg. After September 2009, the coal was supplied from ECL's open cast mines, ie, Sonepur Bazari, Bahula etc, having an UHV of 3,750-4,188 Kcal/kg," the letter said.

"At present 4,000-4,200 GCV coal is being supplied but the billing being done by ECL is for 6,200 GCV. This is having a great impact on the cost of production by way of increased consumption as coal consumption of the plant has increased from the earlier 20-21% to 29-30% because of the lower GCV and high ash content ranging from 35%-40%," the letter added.

Similarly, for CCI, another plant in Assam's Bokajan area, which had an FSA with NECL for 36,000 tons of coal per annum, was earlier getting coal from Tikak Colliery with ash content of around 16-20%.

"Recently, we received coal from Tirap Colliery, having an ash content of 26-27%, which resulted in frequent interruptions in plant operations," the letter written by CCI's R P Tak said.

However, ECL Chairman-cum-Managing-Director Rakesh Sinha, in  reply to a letter written by the Cement Manufacturers' Association (CMA) requesting him to address the issue, said, "It appears that you (CMA) have not been apprised properly about the FSA of CCI's Rajban Cement factory at Simour."

Sinha said that the FSA with CCI is for G-4 and above grades and the coal being supplied corresponds to these grades as mentioned in the FSA.

Sinha further said that "CCI has been requested time and again to depute its representatives to monitor loading of coal from the sidings and record its complaints at the time of loading. All the areas have been directed to despatch coal after redressing complaints, if any, and any complaint thereafter is not acceptable."

Commenting on the development, the Secretary General of CMA, N A Viswanathan, said "ECL, with its dominant position in the matter of coal supplies, is not factoring in and following the letter and spirit of the FSA obligations of the seller."

"With the denial of third party sampling and rigid attitude of the ECL authorities, our member cement companies are suffering badly," Viswanathan added.

"Even CCI, a Government of India enterprise, which is already under BIFR, is not being spared and the coal consignments continue to register slippage of 3-4 grades in terms of the billed GCV and actual GCV of coal received," CMA's Secretary General said.