Government may step in to ensure coal supply for power plants

18 December 2017

The power ministry is likely to ask state power distribution companies to accept revised tariffs that power plants have quoted to win coal contracts, without waiting for clearance from the sector regulator.

This is expected to help fuel-starved power plants quickly get coal supply, for which they have been waiting since September when the auctions were held.

“The regulator’s approval is a long-drawn process. Since it was a transparent online reverse auction approved by the Union Cabinet, we are planning to ask the states to accept the revised tariffs while the regulatory process is underway, subject to its approval. This will ensure that the coal supplies to these projects are expedited,” a senior government official said.

Coal India’s board last week approved the winning bids of a bunch of power producers including Adani Power, GMR Energy and KSK Energy that quoted the highest discount in electricity tariffs to receive coal from the state-run miner.

But for supplies to commence, power plants have to amend their power purchase agreements (PPAs) with distribution companies to factor in the discount in tariffs offered during the auction and get the regulator’s approval for that.

Coal India has to issue letters of intent to the power companies within 15 days of the conclusion of the auction and the power companies have 45 days to amend the PPAs and get approval of the Electricity Regulatory Commission. Coal India will have 30 days to convert the letters of intent into fuel supply agreements.

While Coal India’s board approved the winning bids, it has referred the process for final vetting to an agency in Hyderabad.

Though it is a normal practice for the coal ministry to consult the agency, power companies said any delay in starting supplies could lead some fuel-starved plants to shut down.

Source: ET