The Uttar Pradesh power engineers and consumers organisations have opposed the Union Energy ministry for allowing coal import, alleging that the policy will ruin the power sector.
They said with the price of coal in the international market ruling above 140 US dollar per metric ton, the price of the electricity generated from imported coal will be unaffordable as it will not be less then Rs 12 per unit.
Alarmed by the sharp surge in the demand for electricity by over 20 per cent in energy terms, the Union Energy on Thursday ordered all imported coal based power plants to operate at full capacity. Looking at the emergency situation, the ministry directed all states and all generating companies based on domestic coal to import at least 10 per cent of their requirement of coal for blending.
The inability of Coal India Limited to meet the coal requirement of the National Thermal Power Corporation (NTPC), state-owned power generation companies and independent power plants has forced the Centre to go for coal import. Against the total requirement of over six crore metric tons of coal per annum, the production by CIL is at the same level.
An official order of the Energy 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 plants, the stocks of coal at the power plants have been declining at a worrisome rate.”
The international price of coal has gone up unprecedentedly. It is currently around 140 US dollars per metric ton. As a result of this, the import of coal for blending, which was of the order of 37 million tons in 2015-16 has gone down, leading to more pressure on domestic coal.
The imported coal-based power generation capacity is around 17,600 megawatt and it is entirely in the private sector. The power purchase agreements (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 are not willing to run those plants,” it read.
“All imported coal-based power plants shall operate and generate power to their full capacity. Where the imported coal-based plant is under National Company Law Tribunal (NCLT), the resolution professional shall take steps to make it functional,” the order said.
In order to ensure that all power plants based on imported coal start functioning, the states have been advised that the price of coal should be a pass through. Most states have done that and about 10,000 MW out of 17,600 MW of imported coal-based power generation capacity has started operating. However, some imported coal-based plants are still not operating to capacity, the ministry said.
The plants have been told to first supply power to power purchase agreement (PPA) holders and sell surplus to power exchanges. If generators/group companies own coal mines abroad, mining profit is to be set off to the extent of shareholding, the statement said.
The PPA holders shall pay the generating company on weekly basis, either at benchmark rate or mutually negotiated rate and if discoms/states are unable to buy power, either way, it will be sold in power exchanges, it added.
Power Consumers Forum chairman Avadesh Verma alleged that the Union government was mounting pressure on the state gencos to buy imported coal. He said if the imported coal was used by the state gencos then there would be significant increase in the cost of power and the consumers would ultimately face the burden of costly power.