CIMFR, based in Dhanbad, Jharkhand, and a constituent laboratory of the Council of Scientific and Industrial Research (CSIR), will test the grade of coal at both the loading and unloading points of a power station. If grade slippage is detected, the generators will be compensated by the coal suppliers for the difference in gross calorific value (GCV) of the dry fuel. The lower cost of coal will then be passed through to the consumers, resulting in less expensive power.
A power generation company produces fewer units of electricity if the coal grade is lower than required, as the heat generated by lower lower quality coal is less. However, if its billed for a higher grade of coal despite receiving lower GCV coal, the extra cost is passed on to the distribution utility. This is further passed on to the eventual consumers by the discoms.
Coal companies and power producers, including state-run NTPC, have bickered for years over the slippage between quality of coal billed for by suppliers and the actual coal quality received by the thermal power stations. Despite intervention from the government in the past, the stakeholders had failed to agree on a methodology for ‘third-party sampling’ of coal, whereby an independent entity would verify the fuel quality.
Additionally, the agreement provides flexibility to a power producer to challenge CIMFR results in four other government-owned laboratories if it doesn’t agree with results. While NTPC has signed the agreement for all its power plants with a capacity of nearly 47 gigawatt (GW), private producers can individually sign such agreements with the other two players.