State-owned CIL on Wednesday said that supply of improved quality coal over committed grades and supply above the annual agreed quantity resulted in PSU earning more than Rs 3.125 crore.
“Coal India Ltd’s (CIL) concentrated efforts on supply of improved quality coal over committed grades and supply beyond annual contracted quantity (ACQ) have paid off as the company on whole gained a tidy amount over these twin attributes,” the maharatna firm said in a statement.
The sum of Rs 1,365 crore given under the carbon quality variance in the previous years has been removed in the last fiscal year, which is the net benefit to CIL as a whole, it said.
The PSU ‘s coal supply, above which ACQ had agreed to its customers with a fuel supply agreement (FSA), also provided the company with a significant amount of over Rs 1,760 crore under a performance bonus in the previous two fiscal years combined, it said.
For the year 2019-20, the performance bonus received was Rs 875 crore, while Rs 888 crore was the same for the year 2018-19.
CIL arms Eastern Coalfields and Northern Coalfields numbered Rs 408 crore and Rs 358 crore, respectively, were main contributors to the 2019-20 output reward.
All arms together accounted for around 88 per cent of the overall incentive benefit of the company.
“Similarly, for 2018-19 these two companies stood out for 83 percent of CIL’s overall performance incentive,” CIL said.
Regarding customers terminating supply contracts (FSAs) citing low quality, grade slippage and transport costs, the company official said, “We believe these are hollow reasons. The company takes a serious understanding of its carbon content,” adding that high transport costs are a frivolous justification to pull out as customers happily receive road-mode linkages with full awareness of the shipping costs.
Customers have in the past paid premiums for acquiring coal through auctions without complaint.
Now that COVID-19 has slowed down, as demand for coal is weak and the prices of the coal floor are relatively lower, some of the customers are moving away, citing reasons that are not true.
Coal India may consider stopping more ASFs for a period of time with those customers who renounce the agreements they have entered into and wish to terminate their contracts on frivolous grounds, it said.
In order to improve transparency on the quality of coal, CIL has a well-established third party sampling program covering all its customers and has named well-known agencies such as the Central Institute of Mining and Fuel Research (CIMFR) as an independent consultant to check the quality of coal for the electricity sector and the Quality Council of India (QCI) for the non-power sector.
Coal quality variation has been minimized by these measures and rates are paid in accordance with the real grades of coal supplied to consumers.
Credit or debit notes shall be given in the case of a change of grade, if any and there is a remedial process in place to resolve these issues amicably.
There is no confusion as to the supply, since the object of the linkage auction was to decide the continuous and dedicated supply of coal during the agreement period in a straightforward manner.
“During the pandemic we stood by our customers offering them a slew of friendly measures, sops and concessions and continued supplies,” the official said.
CIL accounts for over 80 per cent of domestic coal output.
