Amid the CEA proposing to form a panel to look into issues with regard to the quality of coal being supplied to power utilities, the Coal Ministry has opposed it saying it is at variance with the already laid down system under the fuel supply pact.

“The proposal of the CEA (Central Electricity Authority) for constituting a committee to assess the sampling and testing facilities would apparently be at variance with the already laid down system and procedures under FSA (Fuel Supply Agreement),” Coal Additional Secretary A. K. Dubey said in a letter to CEA Chairperson A. S. Bakshi.

The proposal to form the committee comes in the wake of differences between Coal India (CIL) and NTPC over the quality of coal being supplied to the power PSU.

Dubey further said the coal is being supplied under a legally enforceable FSA and any dispute on coal supply under the fuel supply pact has to be resolved through a resolution mechanism provided in the agreement itself.

“Supply of coal under the FSA mechanism provides for joint sampling and analysis at the loading end with a mechanism for resolution of disputes on quality issues, if any, through analysis of referee samples. CIL said NTPC has stopped participating in the joint sampling process since January 2013,” the letter said.

Dubey added that while the objective of the proposed panel is to resolve the differences between the coal firms and power utilities with regard to coal quality and supply in place of the already provided dispute resolution mechanism under FSA, CIL has major issues such as payment default and huge outstanding payment with thermal power plants.

“As on date over Rs 8,600 crore has been unilaterally held up by power companies in violation of the provisions of the FSA,” the letter said.

Dubey further said a decision has been taken to conduct third-party sampling of coal supplies and CIL has already given a deadline of September 30 to implement it.

“In the interim, the CIMFR (Central Institute of Mining and Fuel Research) is doing an independent sample analysis. Therefore, CEA may also consider whether this exercise is required at all,” Dubey added.

Coal India’s subsidiary Eastern Coalfields Ltd had last month discontinued coal supplies to NTPC for a few days after the power producer refused to honour bills saying that the quality of fuel supplied was not up to its satisfaction.

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