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Nocoalforneedypowerunits|TheFinancialExpress

Home / Economy

No
coal for needy powerunits
By:SumitJha|NewDelhi|April4,20161:46AM

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Among the power plants that could fail to honour their power purchase agreements (PPAs) with customers
in the absence of clarity over fuel supplies from CIL are Adani Powers thermal stations in Tiroda and
Kawai, Bajaj Energys Lalitpur plant and KSKs unit in Chhattisgarh. (Source: PTI)

Even as Coal Indias production peaked in FY16 at 535 million tonne and stocks have
piled up at pitheads, power stations with aggregate capacity of 8,000 mega watts (MW)
are facing the grim prospect of shutting down as their short-term fuel supply contracts
with the PSU have just expired. Besides, another set of units with aggregate capacity of
22,000-MW capacity have yet to turn the letters of awards (LoAs) from CIL into longhttp://www.financialexpress.com/article/economy/nocoalforneedypowerunits/232307/

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term Fuel Supply Agreements (FSAs).

Among the power plants that could fail to honour their power purchase agreements
(PPAs) with customers in the absence of clarity over fuel supplies from CIL are Adani
Powers thermal stations in Tiroda and Kawai, Bajaj Energys Lalitpur plant and KSKs
unit in Chhattisgarh.
The current scenario is in contrast to the one in 2013 when CIL was finding it difficult to
sign FSAs, despite constant prodding by the government. It had struggled to accept the
FSA obligations even in case of power plants with long-term PPA and slated to be
commissioned before March, 2015. The government at that time identified two groups of
plants with an aggregate capacity of 14,600 MW and asked CIL to supply fuel to them on
a short-term MoU basis as they lacked LoAs from the company.
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Of these units, those with combined (commissioned) capacity of 8,000 MW are equipped
with PPAs but their fuel supplies are uncertain as the short-term contracts ended on
March 31.
Power developers who FE spoke to expressed their concerns over the lack of coal
linkages for these plants despite the creditable improvement in CILs production.
Although the government has often said that it would now be auctioning linkages too on
the lines of coal blocks, it has so far been able to come out with such a policy only for
non-regulated user industries while the regulated power sector awaits clarity.
Back in 2013, apart from identifying plants for short-term supply contracts, CIL was also
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issued a presidential directive to sign FSAs with certain power plants holding valid
LoAs. For this purpose, a list of power plants totaling around 78,000 MW capacity was
finalized by the Central Electricity Authority (CEA) and approved by cabinet committee
on economic affairs (CCEA). However, only about 58,000 MW of this capacity has been
commissioned till date with around 54,000 MW having long-term PPAs and are therefore
eligible to draw coal from CIL under FSAs.
There are also some power plants outside these 78,000 MW units which fulfill the
eligibility criteria for FSAs but are denied coal, another industry source said. He added
that there was need to have a more concrete and robust mechanism to tackle coal
supply issues with CIL.
In July last year CEA prepared a list of units with aggregate capacity of 22,830 MW that
have LoAs with commissioning date varying between FY17 to FY20. These LoAs have
also not been converted into FSAs, creating uncertainty for units like Reliance Powers
plant at Butibori in Maharshtra.
Although, most of the central sector plants in this category are likely to be commissioned
before 2020, there are several private sector plants that are facing financial issues
leading to delays in or stoppage of the construction work. For instance, the second phase
of RattanIndia Power projects in Nashik and Amravati have been classified as
unpredictable by the CEA along with DB Power project in Gorgi.

TAGS: Coal

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