AIPEF seeks withdrawal of Centre’s directive to gencos for coal imports

New Delhi: All India Power Engineers Federation (AIPEF) has urged the Central government to withdraw its direction to state gencos for coal imports amid a shortage of the dry fuel. "Correct determination of GCV (Gross Calorific Value) is critical to avoid overcharging and over-billing. The government of India, while instructing state discoms to import coal, has apparently ignored the fact that most of the state gencos/thermal stations have no past experience in coal imports, particularly regarding the procedures for coal quality determination at the loading point," AIPEF said in a statement on Thursday.

The order to mandatorily import coal exposes state gencos (power generation companies) to the risk of overcharging, fudging of GCV values, and since several of them have no past experience, they would not be able to deal with these matters effectively.

The AIPEF has demanded the withdrawal of the Central government direction to state gencos to import coal, the statement said.

In case states are forced to import coal, the Centre should bear the extra burden (of coal imports), said the AIPEF. The body has also sought the intervention of all state chief ministers in this regard.

Coal imports: Gencos asked to source 10% from abroad

On April 28, the Union Power Ministry had asked state gencos to import 10 percent of their total coal requirement to tackle the shortage of the domestic fuel.

In a letter sent to Union Power Minister RK Singh, AIPEF chairman Shailendra Dubey said that if states are forced to import coal, then the Central government must bear the additional burden of imported coal so that financially distressed discoms (power distribution companies) and common consumers are not over-burdened.

AIPEF has also appealed to CMs of all states and Union Territories to take up the issue with the Centre on priority.

Power crisis result of policy failure of govt: AIPEF

The AIPEF said that the present crisis is the result of the policy failure of the Centre and a lack of coordination between different ministries.

The letter said the present coal shortage is the combined result of a number of policy errors on the part of the Central government, and the shortage has been made worse due to a scarcity of railway wagons.

The decision of the Central government to take away Coal India Ltd's (CIL) accumulated revenues of Rs 35,000 crore in 2016 crippled the development of new mines and capacity expansion of existing mines, said the AIPEF. "Had this surplus been ploughed back into the coal mine sector, the present shortage would not have occurred," it stated.

The fact that the post of Coal India Chairman and Managing Director (CMD) was lying vacant for a year after the term of the incumbent ended shows that the Central government is responsible for coal shortage, said the AIPEF. And the additional charges on account of coal imports are payable by the Central government and must not be unloaded onto states as the policy errors were of the Centre, the letter said.

Also, additional coal imports must be made available to states at prevailing CIL rates, while the difference should be payable by the Union government, it said.

The Power Ministry's direction dated April 28 that seeks to put the financial load of coal imports on the states must be withdrawn as states cannot be penalised for policy lapses of the Centre, it argued.

Most power plants based on domestic coal: AIPEF

The AIPEF chairman also said that since most/all of the thermal stations envisaged, designed and constructed over the past decades are based on domestic coal from linked mines, there was no arrangement for blending of domestic fuel with imported coal.

"The risk of temperature variations in boilers due to uneven mixing would increase incidents of boiler tube leakage. The business of coal is a sellers' market where the terms and conditions are made to suit the seller/exporters, particularly in GCV determination. There is no solution if the GCV tested at the thermal plant is lower as compared to the shipping port value," Dubey said.

The AIPEF said that state-owned thermal stations are planned and constructed only after obtaining the clearance of the Railways Ministry to move coal from the linked mines to these units.

At this stage, it would be unfair to burden states with the high cost of import of coal when wagon shortage is one of the factors responsible for the prevailing coal shortage, it stated.

The AIPEF, citing the Railways Ministry data, said that while the daily requirement of wagons for movement of coal is 441 rakes, the availability/placement is only 405 rakes per day.

From 2017-18 to 2021-22, the railways have placed orders 10,400 wagons per year on an average. For the same period, there was a pendency of up to 23,592 wagons per year, for which the orders have been placed, but wagons have not been supplied, it stated.

Dubey said that in the past, the process of coal import has been the subject of corruption and malpractices.

"There are recorded instances of over-invoicing of imported coal and fudging of coal testing/GCV determination at the port of loading. These cases were taken up by the Department of Revenue Intelligence (DRI), which is under the Finance Ministry," said Dubey.

"The DRI pursued these cases before the Bombay High Court and then before the Supreme Court. These cases taken up by DRI deserve to be taken to their logical conclusion. When the government of India is stressing on coal imports, the deterrent measures to prevent fudging and over-charging are nowhere in evidence," he added.

(PSU Watch– India's Business News centre that places the spotlight on PSUs, Bureaucracy, Defence and Public Policy is now on Google News. Click here to follow. Also, join PSU Watch Channel in your Telegram. You may also follow us on Twitter here and stay updated.)