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Maha Power Co tells CCI: Coal India abuses dominance with ‘lumpy, sticky, wet’ coal

Coal India: Not hot but lumpy, wet and sticky
Coal India: Not hot but lumpy, wet and sticky
Exclusive: Mahagenco (Maharashtra State Power Generation Co) has filed before the Competition Commission of India (CCI) claiming that subsidiaries of state-run Coal India (CIL) is abusing its dominant position by supplying it with low-grade coal at inflated prices.

Mahagenco asked the CCI yesterday that Mahanidhi Coalfields Limited (MCL), a subsidiary of CIL, to start proceedings against CIL and MCL, to allow for the joint sampling of the coal and to impose a fine for the abuse by MCL of its allegedly dominant position.

Mahagenco claimed in its complaint, a draft of which Legally India has seen, that between 4 January and 31 December 2011 it received “extremely poor quality coal”, which was also “lumpy (of very large size)” and “sticky and wet” because CIL did not follow international practices of washing coal before supplying it to its customers.

“The coal companies have not made any investment in washeries, as a result power utilities and other beneficiaries are compelled to get some of their supplies washed through private supplier, which has led to serious pilferage,” Mahagenco stated in its CCI complaint.

Mahagenco and MCL signed a memorandum of understanding (MoU) on 30 September 2010, according to the complaint, under which MCL would provide grade-F coal to Mahagenco.

Under the MoU, MCL was under no obligation to process the coal in washeries but Mahagenco alleged that MCL intentionally did not enter into a clearer contract about the coal, its quality and other parameters because it was a dominant player in the market.

Mahagenco stated in its complaint that the MoU violated the government policy, the constitutional rights of Mahagenco and offended the constitutional scheme under which coal was nationalised.

S.K. Srivastava, MCL quality control general manager, told Legally India that the company had not yet been notified of the complaint. “Before filing a complaint with CCI, Mahagenco should come to us,” he said. “We will look into the complaint immediately.”

Mahagenco also filed a public interest litigation (PIL) against Western Coalfields Limited (WCL) for supplying low quality coal, reported the Times of India on 27 December 2011.

Photo by Marcus Vegas

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