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Maharashtra power generation co creates crisis to import costly coal

MahaGenco does not lift allotted quota from Coal India; pays three times more to import coal.

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The Maharashtra State Power Generation Company (MahaGenco), which has failed to lift its allotted quota of coal from the mines of Western Coalfields Limited this year, resulting in an acute power crisis in the state, has gone ahead and placed orders to import expensive coal from Indonesia and South Africa.

On September 20, MahaGenco issued letters of agreement to two successful bidders to supply imported coal. The imports are scheduled to start arriving today (Thursday).

This may push up power tariffs in the state. Though the quality of imported coal is better than that of Indian coal, it costs almost three times as much. Indian coal costs between Rs1,300 and Rs1,800 a tonne; imported coal costs Rs4,000-Rs6,000.

In the past, too, MahaGenco has been importing coal despite failing to lift consignments from WCL’s mines in Vidarbha. DNA has learnt that till September 2011, MahaGenco imported 9.54 lakh tonnes of coal, which was almost 90% of the contracted amount. Locally, however, the company only managed to lift 80% of the coal it had contracted to buy from Coal India Limited, parent company of WCL.

“The company pays almost three times as much for importing coal,” said a senior official at one of MahaGenco’s power plants. The official, who did not want to be identified for obvious reasons, said that by encouraging imports MahaGenco was causing a loss to the state exchequer.

Documents in DNA’s possession suggest that MahaGenco was due to enter into a cost-plus agreement for uninterrupted supply of coal from CIL by August 27 this year. The draft agreement was sent to MahaGenco on May 27. The agreement has not been signed yet.

“This agreement would have ensured continuous supply of coal,” said an official in the Coal Mine Planning and Design Institute (CMPDI) who was involved in drafting the proposal. “Seeing the criticality of the situation, MahaGenco must act fast,” the official said.

Ravi Anand of the Electricity Consumers’ Association said that since fuel is an important component of power tariffs, MahaGenco is likely to charge the increased cost to the Maharashtra State Electricity Distribution Company (MSEDCL), which in turn will pass on this cost to customers.

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