MCL to go for 2nd price hike

Friday, Nov 18, 2011

BHUBANESWAR: As if the February hike was not enough, the Mahanadi Coalfields Limited (MCL) is seriously contemplating second hike in coal prices. And this is at a time when Odisha is passing through a power crisis triggered by acute shortage of coal.

Industries sources said MCL, a fully-owned subsidiary of Coal India Limited (CIL), is all set to go for it when the company has failed to meet the linkage coal supply as per the fuel supply agreement. MCL now proposes to increase the price of different grade of coal by about 20 per cent, the sources said.

At present, the average cost of the thermal grade linkage coal is ` 740 per tonne and the landing cost comes to about 1,200 per tonne.

While power tariff is decided by Odisha Electricity Regulatory Commission on cost plus basis as per the national electricity policy, another 20 per cent hike in the coal price will further jack up the cost of generation which will be ultimately passed on to the consumers. The domestic consumers will be the worst victim, sources in Gridco said.

‘’Unless the captive power plants (CPPs) are given adequate coal supply as per the fuel supply agreement, the CPPs will not be able to meet the� shortage scenario presently existing in the State,’’ said Sanjib Das, vice-president of the Confederation of Captive Power Plants.

MCL is able to meet 45 to 50 per cent of the guaranteed offtake of the CPPs. These plants have to meet their requirement by buying coal from MCL through e-auctioning. The price difference between linkage coal and coal provided through e-auction is huge.

The common complaint against MCL is that the coal supplied through e-auction route is much inferior quality despite the fact that the price of auction coal is more than double. Mostly coal coming from Hingula and Lingaraj mines go for e-auctioning and it contains high ash, a senior executive of an independent power producer said.

Even national PSUs like Nalco and NTPC are facing shortage of coal.

A senior executive of Nalco said power generation of the CPP at Angul suffers due to poor quality of coal.

(sourced IBNLive.in)