State-run giants Coal India and NTPC are fighting a pitched battle that could black out some homes and factories in eastern and northern India as the coal monopoly has switched off fuel supply to 5,000 mw of generating capacity after a bitter clash over fuel quality. NTPC had held back payment of Rs 1,000 crore, saying it won't pay for stones and rocks that come along with coal, company sources said. But the coal monopoly is not accustomed to such treatment by any customer. From April 1, it stopped supplies to some units. Some have already stopped functioning and the remaining will last less than 24 hours, wiping off 5,000 mw of capacity.
NTPC officials say generation costs can fall substantially if power stations are not forced to accept stones and debris and pay for it at the price of coal. The power major faces the risk of equipment damage because of rocks and stones that get loaded along with coal. It has decided to put its foot down and pay only on the basis of energy content, not the weight or volume of the consignment.
Executives at the thermal power company say NTPC ends up wasting thousands of crores as one-third of the coal it buys turns out to be rocks or stones.
Industry officials say private companies that buy coal from the state monopoly are keenly watching the clash of the state-run titans, and are silently supporting NTPC, which has the muscle to taken on Coal India. Two state utilities have already complained to the Competition Commission, which prepared a report saying Coal India was abusing its monopoly to arm-twist customers.
Even NTPC was earlier accepting the terms and conditions of Coal India, but Chairman and Managing Director Arup Roy Choudhury has taken a firm stand that the company will not pay for debris and has sought the power ministry's support.
Coal India's subsidiary, Eastern Coalfields Ltd, has decided to retaliate. "Despite several letters, NTPC did not settle the entire bill amount for coal supplied between October 2012 and March 2013. It has accumulated to some Rs 1,100 crore. We have now decided to stop supplying coal from April 1 unless this issue is settled," a senior CILBSE -0.55 % official said.
"Some 1,000 mw of power capacity at Farakka and Kahelgaon has already gone off the grid. Generation from rest of the capacity is steadily declining and we may have to shut down operations at both these units if the situation continues for another day. If these two units black out, power supplies to the entire eastern region and parts of north India will be affected," a senior NTPC official told ET.
"NTPC has decided to pay on the basis of energy value of the coal received from all its subsidiaries and has deducted amounts from bills raised by ECL, Bharat Coking Coal as well as Central Coalfields. For other subsidiaries, the deduction is not much because coal from these subsidiaries does not come with large volumes of non-coal components. We have withheld payments of about Rs 900 crore to ECL; in retaliation they have stopped supplies," he said.