Power plants cry foul as Western Coalfields Ltd looks at non-core firms

NEW DELHI: Western Coalfields Ltd (WCL) has initiated the process of signing supply agreements with non-priority sector consumers such as paper and textiles units, even as power plants that had been given LoAs (letters of assurance) by the state-run company are facing shutdown in the absence of fuel.

Industry sources said WCL executives recently inspected sites of several prospective consumers from non-core sectors, including West Coast Paper Mills and Surya Laxmi Cotton Mills as a precursor to signing of fuel supply agreements.

The move by WCL, sources said, is in contradiction to the government's recent emphasis on increasing coal supplies to power projects commissioned by March 2015.

Four power plants aggregating a capacity of 1,610 MW were recently commissioned on the basis of WCL's letters of assurance. These plants belong to Ideal Energy, Abhijeet MADC Nagpur Energy, Vidarbha Industries Power Ltd and state-run NTPC.

WCL is not supplying coal to any of these plants, which have to depend on costlier imports or open market supplies. WCL had asked these plants to sign FSA (fuel supply agreement) but offered coal at 'cost-plus' price, which is 2.5 times higher than Coal India's notified price.

Most of the plants refused to sign the FSA since WCL's letter of assurance had not specified such condition. Though NTPC and VIPL signed FSAs but WCL has not made any of these operational. In the absence of supplies from WCL, these plants too are being forced to go for expensive imported coal and open market sourcing.