The Centre for the first time has invoked the emergency provision, Section 11 of the Electricity Act, mandating all imported coal-based projects to generate power at full capacity, in order to address the country’s fuel crisis.
According to the provisions of the act, the government can ask power generating companies to keep their stations running in accordance with central directions under extraordinary circumstances. An appropriate commission may offset the adverse financial impact of such directions.
The power from these generating companies would be supplied to consumers having power purchase agreement (PPA) with the gencos and any surplus would be put on the power exchanges for purchase by non-linked consumers. If states don’t buy power from these stations, the PPA quantity could move to other linked consumers or put on the exchange.
The imported coal-based generating capacity in the country is about 17600MW. After a central order, asking states to give pass-through status to the price of coal and several states agreeing to these directions, about 10,000MW of capacity based on coal imports is running at present.
The imported coal based power plants in the country are Coastal Gujarat Power (Tata Power), Adani Power Mundra (three phases), Essar Power Gujarat, JSW Ratnagiri, Tata Trombay, GSECL Sikka, IL&FS Tamil Nadu, Coastal Energen, Udupi Power, Simhapuri Energy, Meenakshi Energy and JSW Tornagallu.
Association of Power Producers of India director-general Ashok Khurana said “we cannot afford to have idling capacity and power cuts. We need to ensure that all available capacity is run and supply is maintained. The government order has stated that the pass-through of power cost is to be determined by a committee”.
He said it would take at least a week to 10 days for coal to arrive at the port. Some could be from high-seas while some shipments could be from Australia or Indonesia.
Also the government has decided that Coal India would offer its 20 closed or discontinued underground mines to private players on a revenue sharing model.
The Centre had decided to constitute a committee having representatives from the ministry of power, the Central Electricity Authority (CEA) and power sector regulator CERC to determine the benchmark rate of power from these imported coal based power projects.
This will ensure that power producers who run the plant using imported coal, the price of which is two to three times more expensive than similar domestic coal, do not run into losses from such supplies.
At present, imported coal-based power projects do not get a pass-through status in electricity tariff for any increase in fuel cost or have limited pass-through status not covering the entire cost. The committee will ensure that a tariff is provided that does not make the operation of these plants uneconomical.