Coal news and updates

Govt to set up panel of third party sampling agencies

The Power ministry had said that supply of excessive stones and boulders especially from Bharat Coking Coal Ltd, a unit of Coal India is a matter of concern, which results in high detention of railway rakes and damage to coal handling system of power plants

The Indian government has set a deadline of next month to constitute a panel of third party sampling agencies amid allegations that stones were being dispatched by Coal India Ltd (CIL) even after the introduction of a mechanism to assess the fuel quality.

According to sources, a panel of third party sampling agencies is to be prepared and the consumer shall appoint his sampling agency from the panel and the deadline for this is 31 August 2014.

The issue of fuel quality being supplied to the power plants had also cropped up in the presentation on coal sector earlier made to the Prime Minister Office.

Last week, Piyush Goyal, minister for coal and power, in a written reply to the Lok Sabha had said that to address the issue of fossil fuel quality, third party sampling and analysis facilities at loading ends have been introduced, and the process is being further streamlined.

He was responding to a query on a tiff between CIL and NTPC in regard to conducting the tests of samples of coal by a third party.

NTPC buys a little more than 140 million tonnes of coal and supplies have been coming from both Eastern coalfields and Mahanadi coalfields. It was found that the higher grade slippage (about 7.5%) occurred from supplies emanating from Eastern Coalfields.

Because of the quality issue, NTPC had held up payments, withholding as much as Rs3,035 crore against coal supplied. After a series of discussions and the introduction of third party sampling and strict enforcement of "cash and carry" mechanism by Coal India in October 2013, NTPC cleared its dues since then, but no decision could be made on the old dues. Finally, in the meeting held on 6th March both the companies decided to settle remaining dues based on sampling results at every mine's end for the previous three months.

The issue of third party sampling of coal had also come up for discussions during the Coal India board meeting held this month.

Finance Minister Arun Jaitley during his Budget 2014-15 speech had said that a stringent mechanism for quality control of coal were being put in place.

A system for third party sampling of coal is already in place since October last year at loading points.

The Power Ministry had earlier alleged that stones and boulders were still being dispatched to the power plants.

"Supply of excessive stones and boulders especially from BCCL (Bharat Coking Coal Ltd), a Coal India subsidiary, is a matter of concern. It results in high detention of railway rakes and damage to coal handling system of power plants," said a Power Ministry document.

The mechanism could not address the quality issue and so there is a "need to be done at unloading point", it said.

The issue of coal quality last year had resulted in a standoff between the country's largest power producer NTPC and the world's largest coal producer CIL.

After the government intervened, it was decided that a third party mechanism would be introduced to check coal quality.