The Indian Captive Power Producers Association (ICPPA) has sought normalisation of coal rakes and supplies by earmarking at least 50 rakes per day for the Non-Regulated Sector (NRS) and immediate resumption of coal supply against linkages for sustainable industry operations.
The apex body of captive power producers in the country has also sought allocation of coal despatches through rakes in proportion of 75% (power) and 25% (non-power), as per Ministry of Coal circular for Auction Linkage, dated 15 Feb’16.
ICCPA has further demanded that any decision about stopping/curtailing secured coal supplies should not be taken on adhoc basis. The NRS should be give prior notice in advance (one to three months) to devise a mitigation plan.
Unequal treatment
NRS and CPPs faced acute coal crunch from Aug-Nov’21 as the government stopped supplies and rakes for diversion to the power sector for ‘Priority Coal Supplies’.
Out of a total 78,000 MW installed CPP capacity in the country, around 40,000 MW (i.e. 55%) CPPs are thermal-coal based, which require 200 million tonnes (mn t) of coal per annum. The CPPs provide grid stability, reduce demand pressure on the National Grid network, and pump excess power into the grid, thereby contributing to the national energy pool.
CPPs, however, are struggling to retain cost-competitiveness and sustainable industry operations due to the ongoing situation of non-equitable treatment when compared to the power sector, specifically with regards to allocation, coal linkages, railway rakes, coal pricing etc.
Differential pricing
The Ministry of Coal guidelines for Auction Linkages for Non-Regulated Sector specifies the allocation of coal in proportion of 75% (power) and 25% (non-power). Despite that, the NRS is getting coal to the tune of less than 20%. Moreover, NRS consumers must pay 20% higher price over the notified coal price for the power sector, leading to differential coal pricing for different coal consumers.
Coal India Ltd. (CIL) has recently announced its decision to enhance rake supplies to the power sector to 296 rakes per day in order to increase the coal stock level to 14 days from current levels of around 10 days. This is against the total 272 rakes supplied on a per day basis in Nov. The proposed increase in coal rakes for the power sector will further deprive the NRS consumers from getting sufficient coal.
Therefore, the industry demands equitable treatment between the power sector and NRS with regard to coal and rake allocation as well as prices.
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