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Obstacles in coal supply hamper power producers
AK Ramdas 27 July 2012

SE Central Railway makes available 90 rakes for coal transportation daily and coal miners should ensure that this opportunity is not wasted so that the much needed fuel is made available to power producers

 
Recently, it may be recalled, that Coal India had offered to supply 70 million tonnes of coal at the pit heads due to transport logistics. Three power generators had evinced interest to take advantage of this offer. At the same time, there have been protests against the one-sided fuel supply agreements (FSAs) proposed by Coal India which now have been slightly modified to ensure that CIL pay a 5% penalty if the supplies go below the guaranteed 80% level. But, again, this clause is applicable to facilities commissioned after March 2009.
 
In all fairness to power generators, which depend upon the ‘guaranteed’ supplies from CIL for their requirements committed under FSAs, it would have been realistic if the penalty is actually the ‘replacement’ cost rather than the paltry 5% now proposed. After all, if and when CIL fails to deliver the promised supply under the contract, the power generator will have to obtain the fuel needs from open market which would definitely NOT be cheaper than the contracted price. Right?
 
As we had mentioned in an earlier coverage on the subject, it is imperative that CIL does all it can to increase indigenous output particularly from captive mines by improved technology and reduce the over dependence on the expensive foreign supplies.
 
Although the Dedicated Freight Corridor Corporation of India (DFCCIL) was established in 2006 to construct two corridors, totalling some 3,300km, the project is scheduled to be completed by 2016-17 only, provided there are no delays and cost over-runs, both of which are normally associated with projects of such magnitude!
 
The Eastern Corridor, for example, covers Punjab, Haryana, UP, Bihar and ends up at Dankuni in West Bengal, totalling 1,839km length. This will cover the vital coal producing areas.
 
As part of the Eastern corridor, the 85km stretch between Bhupdeopur and Khargoda, along with the East-West corridor between Korba and Pendra Road are receiving priority attention from the Chhattisgarh government, Railway Board, CIL and the coal ministry. However, land acquisition remains a big issue in making progress.
 
The World Bank is funding 67% of the project cost covering around 1,133km while the balance funds will come under the PPP mode.
 
Meanwhile, reports appearing in the press show that the Bilaspur Division of South Eastern
Railway handles the largest freight loading operation in the country, covering nearly 112 million tonnes of coal, vital for the power development.
 
Everyday, around 90 rakes are available for coal loading each of which can shift 2,200 tonnes, but Arunendra Kumar, general manager of SE Central Railway claims that coal is actually not available to carry and “coal loading is not connected to many pit heads directly and the rake loading has to be supported by road-bridging, which is the responsibility of the miner” and not the railways. Because of this lacuna, around 25% of the rakes are empty! Miners need to take immediate steps to ensure that empty rakes are not ‘wasted’ but fully utilized, by gearing up the loading operations.
 
(AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce and was associated with various committees of the Council. His international career took him to places like Beirut, Kuwait and Dubai at a time when these were small trading outposts; and later to the US. He can be contacted at [email protected].)
 
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