Power producers to reduce power tariff by 4 paise under Shakti

18 September 2017

 Power producers participating in Shakti, the auction for long term coal supply contracts, offered to reduce their power supply tariffs by 4 paise per unit on the higher side and 1 paise per unit on the lower side.

Some 27 million tonnes of coal was allocated and it would fetch Coal India an additional income of Rs 2,500 crore every year. Following this discounts, power consumers are expected save Rs 125 crore every year for the next 25 years.

At the second day of auctions, for Shakti, which ended on Tuesday around 11.30 pm, power producers were asked to bid on the discounts they are to offer to receive allocation of coal from Coal India. Coal India offered around 27 million tonnes.

Coal India received bids for discounts of 4 paise per unit on existing tariffs of power producers for 22% of the coal on offer which amounted to 6 million tonnes a year.

Discounts of 3 paise per unit on existing tariffs were received for one third of the coal on offer that amounted to 9 million tonnes. Another one third of coal allocated received bids for 2 paise per unit while the rest at 2.89, million tonnes (10% of the coal on offer) received bids for discounts of 1 paise per unit.

According to Coal India executives, Coal India invited expressions from potential bidders on 19 August for participating in Shakti. It received applications from 31 companies. They were scrutinised by Central Electricity Authority and finally 14 bidders were found to be eligible.
Subsequently CIL conducted the auction for Independent Power Producers under Shakti on Monday and Tuesday. Out of these 14 eligible companies 10 participated in the auction. It used a right to choose technique wherein bidders quoting higher discounts to its existing tariffs would have a priority in choosing preferred source.

Shakti – Scheme for Harnessing and Allocating Koyla Transparently in India is the government’s new policy for allocating long term future coal contracts. This replaced the age old system of awarding coal supply contract by the coal ministry on a nomination basis.

As part of this policy Coal India is to grant 25-years supply contracts on notified price on auction basis for independent power producers having concluded power purchase agreements.
Source – ET