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Coal shortage forces PSPCL to impose power cuts

Vishal Rambani, Hindustan Times  Patiala, May 06, 2014
First Published: 08:15 IST(6/5/2014) | Last Updated: 19:41 IST(6/5/2014)

With the mercury as well as the power demand shooting up, the coal crisis has derailed all plans of the Punjab State Power Corporation Limited (PSPCL), which has started imposing unscheduled power cuts. Due to coal shortage, only six of the 14 power units of Punjab’s three thermal plants are operating, forcing the PSPCL to either buy costly power from outside the state or impose power cuts. Unscheduled cuts were witnessed in many parts of the state on Monday afternoon.


Officials said the power corporation management had failed to settle the coal issue well in time, leading to the crisis.

During the last financial year (2013-14), the thermal plants at Rupnagar, Bathinda and Lehra Mohabbat have even failed to meet the Central Electricity Authority (CEA) generation targets due to coal shortage.

The PSPCL, formerly the Punjab State Electricity Board (PSEB), entered into a joint venture agreement in March 2001 with a private party, Panem Coal Mines Limited, for development and operation of a coal mine at Pachwara, Jharkhand.

The coal purchase agreement (CPA) was signed between the PSEB and Panem in August 2006 for 30 years to supply coal from this mine to the board’s thermal plants. The mine is being operated since then by Panem.

Panem, which meets 60% of the coal requirement of the three thermal plants of Punjab, has stopped supply since April 10.

Only 3.5 lakh tonnes of coal is expected to reach thermal plants from Coal India Limited (CIL) against the monthly requirement of 10.6 lakh tonnes. The coal stock is reducing daily at all three thermal plants.

“Presently, eight of the 14 thermal units of the PSPCL are not being operated. The PSPCL may have to shut down more units if the coal problem continues.

The PSPCL is planning to purchase power through short-term tenders to tide over the situation, which is its own creation. Apart from power cuts, this will cost the exchequer very heavily and in turn, the consumers,” an official said.

Sources said the standoff started when the PSPCL claimed that the coal supplier was supplying coal of lower grade, and thus reduced the payments. As per the CPA, the PSPCL is to make payment to Panem as per the grade of coal supplied.

Grading of coal is done on the basis of its calorific value. Higher calorific value means better grade and hence higher payment. Joint testing of coal by the PSPCL and Panem at plant sites is done.

Normally, testing of c oal at plants is carried out by chemical laboratory officials. However, the management at Guru Hargobind Thermal Plant (GHTP), Lehra Mohabbat, took a serious note of the reports regarding discrepancies and manipulations in the testing of coal and deputed a group of engineers in March 2012 to supervise testing of coal being done by the chemical department.

This practice brought out shocking results. The grades of coal at the Lehra plant were found to be much lower than those at other plants and also less than previous year’s grades.

A single change of grade makes a difference of 7-15 lakh per rake. Due to the steps taken by the Lehra plant authorities to ascertain the coal quality in a transparent manner, Panem got upset as it had been deprived of crores of rupees. And from here the standoff started.

Annoyed over the reduction in payments, Panem star ted reducing supplies to Lehra and Rupnagar plants on one pretext or the other, apart from raising financial issues.

To sort the issue, the PSPCL has already made advance ad hoc payment of 100 crore to the coal supplier. Another advance payment of 50 crore was made by the PSPCL to Panem in March 2013. In November 2013, the PSPCL decided to pay 6 crore per day as advance freight to Panem.

In the meantime, a notice for arbitration, dated May 2013, was sent to the PSPCL by Panem, demanding more powers. Panem has been interrupting supplies of coal repeatedly during the past two years and extracting monetary benefits worth hundreds of crores of rupees over and above the CPA from the PSPCL.

When contacted, PSPCL chairman-cum-managing director (CMD) KD Chaudhri stated that apart from the arbitration process, parleys were on to resolve the issue. “We are hopeful that it would be resolved in the next few days,” he added.

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