Don't give incentives to Coal India if it supplies low quality coal: NTPC
State-owned Coal India Ltd (CIL) should not be given incentives that it gets for exceeding the minimum assured quantity in case it supplies inferior quality fuel to power plants, a top NTPC official said on Monday.
As per the fuel supply agreement, if CIL supplies more than the minimum assured quantity of 80 per cent of the total order to its clients, then the company is provided with some incentives.
"We have resolved 95 per cent of all our issues. There are only one or two issues that remain to be sorted out, and one of them is the quality of coal," said Arup Roy Choudhury, chairman and managing director of NTPC, on the sidelines of a SCOPE event.
He added that if the coal major supplies cheap quality of coal to thermal power generating stations, it should not be given any incentives.
"We cannot sign an FSA (fuel supply agreement) without knowing what is the quality of the coal, but if they (Coal India) give low quality coal to us they should not be incentivised, this is one big issue which remains to be sorted out," he said.
He added that Coal India has agreed to a third party measurement of coal to ascertain its quality.
"They have agreed to a third party measurement but that will come only in end September," he said, adding that the company's equipment is not designed to handle low calorific value coal and require blending.
Although Coal India has switched to the GCV (gross calorific value) formula of coal, the company is yet to equip its washing and crushing units on a par with international standards.
Coal India has so far signed fuel supply pacts with 56 power plants.
The deadline set by the Prime Minister's Office for signing of FSAs between CIL and power producers expired in January.
Meanwhile, Mr Choudhury also said that the coal mining sector has not kept pace with power generation.
"We are not short of coal, we have "too much" but we do not mine enough...the production is less," he said.
Pitching for a coal regulator, he also said that there is need for more players in the mining sector and greater transparency.
