Imported Coal Power Plants Ordered To Function At Full Capacity

The Ministry of power on Thursday ordered all imported coal power plants to operate at full capacity highlighting that the demand for power has risen by almost 20 per cent.

The Union ministry has directed all states and all generating companies based on domestic coal to import at least 10 per cent of their requirements of coal for blending amid a looming power crisis in the country.

An official order from the ministry read, “The demand for power has gone up by almost 20 per cent in energy terms. The supply of domestic coal has increased but the increase in the supply is not sufficient to meet the increased demand for power. This is leading to load shedding in different areas. Because of the mismatch between the daily consumption of coal for power generation and the daily receipt of coal at the power plant, the stocks of coal at the power plant have been declining at a worrisome rate.”

It further read, “The international price of coal has gone up in an unprecedented fashion. It is currently around 140 US Dollars per tonne. As a result of this, the import of coal for blending, which was of the order of 37 Million Tonnes in 2015-16 has gone down, leading to more pressure on domestic coal. The imported coal-based generation capacity is around 17,600MW.”

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“The PPAS for imported coal-based plants do not have adequate provision for pass-through of the entire increase in the international coal price. At the present price of imported coal, running of imported coal-based plants and supply of power at the PPA rates will lead to huge losses to the generators and therefore the generators were not willing to run those plants,” it added.

The order further read, “All imported coal-based power plants shall operate and generate power to their full capacity. Where the imported coal-based plant is under NCLT, the Resolution Professional shall take steps to make it functional.”

Meanwhile, states have been advised that the coal prices should be a pass through so as to ensure that all power plants based on imported coal start functioning.

As much as 10,000 MW out of the 17,600 MW of imported coal-based generation capacity has started operations as most of the states have heeded to the ministry’s instructions, reported ANI.

However, the ministry said that some imported coal-based capacity is still not operating.

The plants have been advised to supply power first to holders of the power purchase agreement (PPA) and then sell the surplus to power exchanges. The statement said that if the generating companies own coal mines abroad, then mining profit is to be set off to extent of shareholding.

It added that PPA holders shall pay the companies on a weekly basis either at the benchmark rates or at rates mutually negotiated. If distributing companies or states are unable to buy power, either way, it will be sold in power exchanges.

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