CIMFR report to HC confirms that WCL supplied inferior coal

On each count, the report found that WCL had supplied sub-standard coal of lesser grade and overcharged MahaGenco. Citing an example, the CIMFR report stated that, at Ghuggus siding, WCL had claimed that its coal had 27.84 percent ash content with 4801 GCV and was of G-9 grade,

However, CIMFR tests found that it had 48.4 percent  ash content, with 3040 GCV and was of G-15 (six grades lower) grade.

WCL coal's ash content was on an average more than 45 percent and the CIMFR test report for both loading and unloading points clearly contradicted its claim that it had supplied quality coal to MahaGenco.

MahaGenco has filed an affidavit last week (Friday) and the petition will come up for further hearing before the High Court on January 22.

Mahagenco said in its affidavit that it had paid at least Rs 1,350 crore more to WCL though it received inferior quality of coal.

It squarely charged WCL with "duping" it by charging exorbitant amounts for inferior quality of coal.  WCL always charged for G-9 grade of coal (declared grade as per WCL notification) while in reality it always supplied G-14 to G-17 grade of coal, MahaGenco alleged.

Due to such manipulation, MahaGenco had suffered losses worth Rs 800 crore per year since the signing of the Fuel Supply Agreement (FSA) on November 21, 2009, its affidavit said.

MahaGenco also charged WCL with not providing proper cooperation to CIMFR to conduct third party sampling process at loading points, ignoring the High Court's directions.

It may be recalled that the Nagpur bench of Bombay High Court vide its order dated October 9, 2013, had directed third party sampling of supplied coal supplied by WCL to MahaGenco power plants at loading and unloading points, to check ash content in a public interest litigation (PIL) filed by a local citizen called Anil Wadpalliwar.

In its affidavit, the WCL had claimed that it had supplied adequate quantity of coal, with ash content of around 25 percent. Besides, coal quality is jointly checked at loading point (WCL mine) and signed by MahaGenco's representative, it had claimed.

WCL had also refused to take responsibility for alleged deterioration of coal quality during transit, since the transporter was appointed by MahaGenco.

In his affidavit, petitioner Anil Wadpalliwar had brought to the notice, an order passed by the Competition Commission of India (CCI) during the intervening period in which the CCI had slapped a fine of Rs 1,773 crore on Coal India Ltd (CIL) on a complaint filed by MahaGenco, charging CIL and its subsidiaries (mainly WCL) with supplying inferior coal, overcharging and misusing its near monopoly which  effectively led to a hike in power generation cost. 

The CCI had examined all technical details and data to arrive at the conclusion that MahaGenco is a victim of poor coal supplied by CIL and its subsidiaries. The affidavit has also highlighted shocking figures about short supply of quality and quantity of coal by WCL to MahaGenco due to which many of its plants were left with coal stock of one or two days.

Coal realisation from WCL during the last two years has been only 76.8 percent and 77.5 percent, while during the current fiscal, coal materialisation of WCL up to August 2013 is only 65 percent, the affidavit had stated.

Most WCL mines are located in the Vidarbha region and also thermal power plants run by MahaGenco. Quoting a recent CBI action against a sub-standard imported coal supplier, the petitioner had demanded third party independent sampling of imported coal and also a special performance audit of power utility as well as scrutiny of its coal procurement by the Comptroller Auditor General (CAG).

"There was a system of average grading pricing regime, but after the 2009 Fuel Supply Agreement (FSA) we are forced to pay as per the grade claimed by the coal company and this has resulted in shooting up of power tariff," the affidavit said.