The All India Federation of Power Engineers has urged the central government to withdraw its order for state gencos to import coal amid dry fuel shortages, which cripple power generation in the country. “Correct determination of GCV (Gross Calorific Value) is critical to avoid overcharging and overbilling. The Indian government, while instructing state discoms to import coal, has apparently ignored the factor that most state-owned thermal stations/gencos have no prior experience of coal imports, particularly with regard to procedures for coal quality determination at the point of loading,” said AIPEF (Federation of Indian Power Engineers) in a release.
He explained that these state-owned gencos (energy generating companies) have thus been exposed to the risk of overcharging, falsification of GCV values and, having no previous experience, they would not be able to deal with these matters effectively. Electrical engineers (AIPEF) demanded the withdrawal of the central government’s order for state gencos to import coal, the statement said. In case the states are forced to import coal, the Center must bear the additional burden (of coal imports), he said and sought the intervention of the main ministers of all the states. On April 28, the Union Ministry of Energy asked state gencos to import 10 percent of their total coal requirement to address domestic fuel shortages.
In a letter to Union Energy Minister RK Singh, AIPEF President 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 discoms (energy distribution companies) already in financial difficulties and ultimately the common consumer is not overburdened. AIPEF has also called on the Chief Ministers of all States and Union Territories to address the issue with the Center with the highest priority.
The AIPEF letter said that the current crisis is the result of the failure of the Center’s policy and the lack of coordination between the different ministries. The letter said that the current coal shortage is the combined result of a series of policy mistakes by the central government, and the shortage was made worse by a shortage of rail cars. The central government’s decision to withdraw CIL’s (Coal India) accumulated revenue of Rs 35 000 crore in 2016 stalled the development of new mines and capacity expansion of existing mines. If this surplus had been reinvested in the coal mining sector, the current shortage would not have occurred, he said.
Keeping Coal India’s CMD post vacant for a year after the end of the incumbent’s term showed that the central government was responsible for the coal shortage and that additional charges for imported coal are payable by the central government and not must be uploaded to the states. since the policy errors were from the Center, the letter said. In addition, additional imports must be made available to states at prevailing CIL rates, while the difference must be paid for by the Union government, he said.
The Energy Ministry instruction of April 28, 2022 that seeks to put the financial burden of coal imports on the states must be withdrawn as states cannot be sanctioned for failures in Center policies, he argued. The president of AIPEF said that, since most/all thermal power plants were planned, designed and built in the last decades based on national coal from linked mines, there was no agreement to mix national fuel with imported coal. “The risk of boiler temperature variations due to uneven mixing would increase boiler tube leak incidents. The coal business is a seller’s market where terms and conditions are tailored to sellers/exporters, particularly in the determination of GCV.
There is no solution if the GCV tested at the thermal plant is lower compared to the shipping port value,” Dubey said. The AIPEF letter said that state thermal stations are planned and built only after obtaining authorization from the Ministry of Railroads to move coal from mines linked to these units. At this stage, it would be unfair to charge states for the high cost of importing coal when railcar shortages were a factor responsible for the prevailing coal shortage, he stated. .
The AIPEF, citing data from the Ministry of Railways, said that while the daily requirement of wagons for the movement of coal is 441 rakes, the availability/placement is only 405 rakes per day. From 2017-18 through 2021-22, the railroads have placed railcar orders at an average of 10,400 cars per year. For the same period, there was a processing of up to 23,592 wagons per year, so the orders have been made but the wagons have not been supplied, he said. Dubey said that in the past, the coal import process has been subject to corruption and malpractice.
“There are registered cases of overinvoicing of imported coal and of falsifying coal tests/GCV determination at the port of loading. These cases were taken up by the Department of Revenue Intelligence (DRI) which reports to the Ministry of Finance.” DRI brought these cases before the Bombay High Court and then the Supreme Court. These cases addressed by DRI deserve to be taken to their logical conclusion. When the Indian government emphasizes coal imports, disincentives to prevent tampering and overcharging are not obvious,” he added.
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Article first published: Thursday, May 12, 2022 at 4:00 p.m. [IST]
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