Pvt firms upset over coal min’s preference to govt power plants

Private power players are crying foul over the government’s instruction to Coal India (CIL) to allot coal “out of turn” to power plants owned by the central and state governments.

The development comes at a time when the gap between the plant load factors (PLFs) – capacity utilisation levels – between private and government-owned power plants continue to widen, and this decision, independent power producers claim, would further impair their ability to service debts, and in turn worsen the bankers’ portfolio of stressed assets in power, currently seen at more than Rs 1.74 lakh crore.

In the wake of a more-than-expected rise in power demand as mercury rises, the coal ministry has written to CIL and Singareni Collieries Company (SCCL) that “out of turn coal allotment may be made to state and central PSU gencos (generation companies) to meet the surged coal requirement for power generation,” wherever it is operationally feasible.

Ashok Kumar Khurana, director general of the Association of Power Producers, called this move “against the Prime Minister’s stated policy of level playing field and ease of doing business”.

As on Monday, 114 thermal power plants with steady coal linkage had enough coal to last for 10 days on an average. There were 16 plants with super-critical stock of less than four days.

A senior CIL official told FE that the company’s production is maintaining a 14% growth. CIL supplied a record 454.3 MT to the power sector in FY18, representing a growth of about 7%. The company produced 44.8 MT in April. Though 96% of the target, the figure was 13% more over the year-ago period.

“Excess coal should not be allocated on the basis of plant efficiency, not ownership,” Khurana said. An industry veteran, who did not wish to be named, told FE that if there is excess coal production, the minimum supply requirement to power plants must be raised from 75% of the annual contracted quantity, as it was agreed earlier.

Thermal power plants in the country generated 92,623 million units of electricity in April, 3.4% higher than the same month last year, and 2.7% more than the programme set for the month. While this increased PLFs of central government-owned power plants by two percentage points year-on-year to 76.5%, the same for private players slipped by six percentage points to 56.3% for the month.

Unavailability of coal is hampering possible improvement in thermal power capacity utilisation, research agency Care Ratings said on Friday in a note on the power sector.

To ease coal availability to private power plants, the government earlier this month allowed them to transfer existing coal linkages to their nearest mines, which is seen to result in lower coal transportation costs.