Coal news and updates

The state-run Maharashtra State Power Generation Company (MahaGenco) has made a strong case for pooling of project cost plus mines on notified price to discover uniform price of coal supplied by the Coal India's arm Western Coalfields (WCL) to it.

 

MahaGenco, which recently received boost after Competition Commission of India imposed penalty of Rs 1,773 crore on Coal India (CIL) and its three subsidiaries for the alleged misuse of position as monopoly suppliers, has argued that WCL coal is more expensive among CIL subsidiaries.

 

MahaGenco officer, who did not want to be named, told Business Standard, ''MahaGenco gets 50% coal from WCL. However, WCL is insisting on lifting of expensive cost plus coal while other public sector undertakings (PSUs) are getting coal at notified price. Notified price is the price announced by Coal India for all its mines but the cost plus price is charged by WCL for each project which is higher than the notified price. In view of WCL's move to switch step by step to cost plus price from the notified price of annual contracted quantity (ACQ), the cost of generation is increasing.''

 

The official said present contracted cost plus quantity is 24.27% of ACQ. With the additional offered cost plus quantity, contribution of cost plus will be over 50.76% of ACQ. He mentioned that pooling will help share the burden by other PSUs and not alone by MahaGenco.

 

WCL spokesman said the decision about pooling does not come under its jurisdiction but it is to be taken at the level of CIL.

According to the official, cost plus coal prices in general are 44% higher than notified prices.

 

''WCL supplied 25.4% cost plus coal during April-November this year. MahaGenco had borne the additional financial burden of Rs 227.35 crore during 2012-13 due to supply of coal on cost plus price. Furthermore, WCL is also asking bank guarantee of Rs 1,629.93 crore towards the supply of cost plus coal for their upcoming coal projects ,'' the official said.

 

WCL spokesman informed that the price of G9 grade coal supplied to MahaGenco at the notified price will increase to Rs 1,170 per ton from the present level of Rs 1,070 per ton due to 9.35% rise in price.

 

MahaGenco with an thermal capacity of 8,000 MW procures 50 million ton annually of which nearly 22.7 to 24 MT is procured from from Western Coalfields. During April-November 2013, MahaGenco received 9.90 MT against contracted 14.44 MT from Western Coalfields (69% realisation).

 

The official said ''MahaGenco spends nearly Rs 3,500 crore to purchase coal from the WCL. This is due to cost plus coal supply from WCL. On top of it, Coal India has increased 10% price of coal supplied by WCL to MahaGenco. This will further lead to additional burden of over Rs 500 crore.''

 

However, WCL spokesman said it was conducting assessment of impact due to 10% rise in price approved by CIL.

 

 

Source: http://www.business-standard.com