Exorbitant Power Tariff In Maharashtra: Does Coal Lose Steam Before It’s Fired?

Nagpur: If Maharashtra has an exorbitantly high power tariff, the problem perhaps stems from the very first step — generation. A high cost of production, blamed on poor quality coal, ultimately results in dearer power for consumers. Getting the right quality of coal can reduce cost of production by nearly Re 1/unit, bringing a proportionate decrease in tariff payable by consumers, say stakeholders.
At present, consumers pay anything between 4.71 to 16.64 per unit of power, depending on the usage slab.Since the last fiscal, it has gone up by over a rupee in most categories.

Last year, Mahagenco, in its petition before Maharashtra Electricity Regulatory Commission (MERC), went on record saying the coal quality is far inferior to what’s declared by mining companies, by the time it’s unloaded at power plants. It said against a declared gross calorific value (GCV) ranging between 3,401 and 4,300, it slips to 2,980 to 3,180 after considering all factors.
Vidarbha Industries Association’s (VIA) representative, R B Goenka, in the petition, had pointed out the coal which Mahagenco gets from CIL subsidiaries, including Western Coalfields Limited (WCL), has a GCV ranging from 3,800 to 4,200. It is wrong for Mahagenco to say it gets lower-grade coal.
To this, Mahagenco replied there are slippages when the coal is unloaded at its end, and GCV comes down to 3,100 to 3,300 due to moisture. It further reduces to 3,180 to 2,980 GCV when fired in the plants.
In simple words, GCV is the measure of heat which a certain grade of coal can generate. As Mahagenco largely has thermal power plants, coal is its major feedstock. Lower the GCV, more the amount of coal it will need to fire power plants and generate electricity. For example, if the firewood is damp, more of it is needed to light up a hearth. The same is with power plants, explained a source.
Goenka says this is where the cost of production goes up, finally leading to higher tariffs. Mahagenco supplies power to MSEDCL, the distribution company carved out of the erstwhile MSEB.
The petition in which the arguments took place was moved for a tariff revision by Mahagenco for its supply to MSEDCL. “If Mahagenco says it gets lower GCV coal as declared, due to slippages, it is obvious that it ends up consuming more fuel to produce each unit of power,” says Goenka.
It’s incorrect to say Mahagenco gets a lower grade as the coal it gets from CIL companies has a GCV up to 4,200 and this can be confirmed by Central Institute of Mining and Fuel Research (CIMFR), he told before the regulatory commission that approves the tariff. Using the right grade coal can reduce Mahagenco’s generation cost by at least 90 paise, he says.
Responding to a TOI query, a Mahagenco spokesperson said coal does not have the same calorific value even in a single batch. If the value dips from what is stated, Mahagenco sends a credit note to the CIL subsidiary from where it gets the supply. It is vice-versa if the calorific value happens to be more than what is stated.
The samples are examined by a third-party agency, and the decision is binding on both. A senior official in WCL said separate samples are drawn out for further checks, if the dispute continues.
The undisputed dues payable by Mahagenco to WCL stand at over Rs 3,000 crore. This is over and above the amount on which there is a dispute over the grade of coal, said a source.