Gujarat's power consumers paying for losses caused by Coal India Limited

Supply of inferior quality coal to power plants has increased power production cost, points out NGO

By Anupam Chakravartty
Published: Monday 11 February 2013

Should consumers be made to pay if the cost of power generation increases because of inferior quality coal supplied to power plants? The answer would be yes, if one were to take the case of Gujarat. A non-profit in Ahmedabad has brought this to the notice of the Gujarat Electricity Regulatory Commission (GERC). Consumer Education and Research Society (CERS), an NGO that works on consumer rights, has complained to the commission against “transfer of financial burden of receiving inferior coal by charging the consumers illegally”.

Chief general manager of CERS, K K Bajaj, says the power generating companies in Gujarat have been receiving inferior quality coal from Coal India Limited (CIL), which has led to 25 per cent increase in requirement of coal from 0.6 kilogramme per kilo watt hour to 0.75 kilogramme per KW. “The losses thus incurred due to increased consumption are being offset by charging the electricity consumers over the past four years,” says Bajaj.

GSECL wants 12 per cent tariff hike

The plea of Gujarat State Electricity Corporation Limited (GSECL) for revision of tariff, filed before GERC, says the power utility has incurred a loss of Rs 160.69 crore. The reason for it is the difference between the actual calorific value of coal received at power stations of GSECL and the calorific value of coal considered for energy charges. GSECL is demanding 12.5 per cent increase in electricity tariff this year. Private power supplier Torrent Power Limited, which covers cities such as Ahmedabad and Surat, faced a loss of Rs 62 crore because of inferior quality coal.

CERS says that Gujarat's power generation companies signed a contract to purchase 'D' grade coal but have been receiving 'E' grade coal, which led to uncontrollable loss of Rs 160.69 crore for GSECL. Grades of coal determine its consumption and per unit cost of generation. D grade coal, having a calorific value of 4,200-4,940 kilocalorie (Kcal) per kWh, is priced at Rs 1,140 per tonne, and 'E' grade coal that has a calorific value of 3,360-4200 Kcal per kWh is priced at Rs 880 per tonne. The cost of coal increases further by Rs 2,000-2,500 per tonne because of railway freight charges as coal is received in Gujarat from a distance of 1,000 km 1,200 km.

Regulator wants no role in dispute

GERC admits that it has received the CERS complaint. “However, it is for the electricity generation companies to sort out this issue out with CIL,” an official, on condition of anonymity, told Down To Earth. Meanwhile, CERS has alleged that the collection of revenue for uncontrollable losses from consumers is illegal under the Electricity Act of 2003.

“Shockingly, instead of asking CIL to pay for the losses, consumers are paying more for electricity in the state. This could also true for other parts of the country,” he added.


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