Adequate coal will be provided to power plants as extensive measures to augment domestic output and a strict mechanism to control the fuel quality are being put in place to end the impasse in the sector, the government said on Thursday.
Power plants across the country are facing fuel shortages and state-owned Coal India Ltd, which accounts for over 80 per cent of domestic coal production, and NTPC have locked horns over fuel quality issue.
“Comprehensive measures for enhancing domestic coal production are being put in place along with stringent mechanism for quality control and environmental protection, which includes supply of crushed coal and setting up of washeries,” Union Finance Minister Arun Jaitley said while presenting the Budget for 2014-15.
The minister added that sufficient quantity of coal will be provided to power producers, thereby unlocking the dead investments.
“The existing impasse in the coal sector will be resolved and adequate quantity of coal will be provided to power plants which are already commissioned or would be commissioned by March 2015, to unlock dead investments,” he said.
The announcement follows the Coal Ministry earlier rejecting the Power Ministry’s request to provide fuel to 9940 MW plants of companies like Essar Power, GMR and Power.
Mr. Jaitley further said that an exercise to rationalise coal linkages, which will optimise transport of coal and reduce cost of power, is underway.
Coal and Power Minister Piyush Goyal had also earlier met top officials of both the ministries to thrash out the issues like quality of the fuel.
The quality of coal supplied by state-owned CIL has again become a bone of contention as the Power Ministry has alleged that stones and boulders are still being dispatched in supplies even after the introduction of the third party sampling mechanism.
The mechanism for third party sampling of coal quality, which was introduced in October last year at loading points, could not address the quality issue.
During the sampling of the fuel at the loading point, the stones are separated from the coal.
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.
Last year, NTPC had alleged that it was being supplied inferior quality of coal.
This was followed by CIL stopping coal supplies to NTPC’s plants saying the state-owned power major owed huge dues to the coal PSU.
Besides, NTPC had refused to enter into fuel supply pacts with CIL.
After the government’s intervention it was decided that the third party mechanism would be introduced to check the quality of coal.
Coal India Ltd, meanwhile, had missed its production target of 482 million tonnes (MT) last fiscal and produced just 462 MT.
