Uttar Pradesh power engineers and consumer organizations have challenged the Union Department of Energy for allowing the import of coal, alleging the policy would ruin the power sector.
They said that with the price of coal in the international market above 140 US dollars per metric ton, the price of electricity generated from imported coal will be unaffordable as it will not be lower than 12 rupees per unit. .
Alarmed by the sharp increase in electricity demand of more than 20% in energy terms, Union Energy on Thursday ordered all imported coal-fired power plants to operate at full capacity. Considering the emergency situation, the ministry has ordered all states and domestic coal-based generation companies to import at least 10% of their coal requirements for blending.
Coal India Limited’s inability to meet the coal needs of the National Thermal Power Corporation (NTPC), state-owned power generation companies and independent power plants forced the Center to opt for coal importation. Compared to the total requirements of more than six crore metric tons of coal per year, CIL’s production is at the same level.
An official order from the Ministry of Energy read: “The demand for electricity has increased by almost 20% in terms of energy. Domestic coal supply has increased, but the increase in supply is not sufficient to meet the increased demand for electricity. This leads to load shedding in different areas. Due to the mismatch between the daily consumption of coal for power generation and the daily receipt of coal at power plants, coal stocks at power plants have been declining at an alarming rate. »
The international price of coal has risen unprecedentedly. It is currently around US$140 per metric ton. As a result, the import of coal for blending, which was around 37 million tonnes in 2015-16, has decreased, leading to increased pressure on domestic coal.
Imported coal-fired power generation capacity is approximately 17,600 megawatts and is entirely private sector. Power Purchase Agreements (PPAs) for imported coal plants do not contain adequate provisions to pass on the full increase in the international price of coal. At the current price of imported coal, operating imported coal power plants and supplying power at PPA tariffs will result in huge losses for generators and therefore generators are unwilling to operate these power plants” , we read.
“All imported coal-fired power plants must operate and produce electricity at full capacity. Where the imported coal plant is subject to the National Company Law Tribunal (NCLT), the resolution professional must take steps to make it functional,” the order states.
In order to ensure that all power plants based on imported coal start operating, states have been advised that the price of coal should be a pass through. Most states have done so, and about 10,000 MW of 17,600 MW of imported coal-fired power generation capacity has started operating. However, some imported coal-fired power plants are still not operating at full capacity, the ministry said.
Plants were told to first supply power to power purchase agreement (PPA) holders and sell the surplus to power exchanges. If the group’s producers/companies own overseas coal mines, the mining profits must be compensated to the extent of the shareholding, the statement said.
PPA holders will pay the production company on a weekly basis, either at the reference rate or at the mutually negotiated rate and if the discoms/states are unable to purchase power, either way, it will be sold on power exchanges, he added.
Power Consumers Forum Chairman Avadesh Verma alleged that the Union government was increasing pressure on state producers to buy imported coal. He said if imported coal was used by state gencos, there would be a significant increase in the cost of electricity and consumers would ultimately face the burden of expensive electricity.