The Union Ministry of Power (MOP) has ordered all the power plants based on imported coal to resume operation at full capacity in an attempt to meet elevated power demand in the country.
The decision was taken by invoking the section 11 of the Electricity Act, 2003 which states that a generating company, in extraordinary circumstances, shall operate and maintain any generating station in accordance with the government’s directions.
With a combined installed capacity of 16,730 mega-watt (MW), the imported coal-based plants account for a mere 8% of the total coal-fired plants fleet. However, prolonged closure of some of these plants due to soaring coal prices in the global market has added more pressure on the domestic-run plants.
Under the provision, the imported coal based plants, currently out of service under National Company Law Tribunal, have been directed to seek assistance to resolve the matter.
Provision of power sale
One of the major hurdles faced by the imported coal based plants’ operators is that they do not have adequate provision to pass the entire increase in coal prices through the existing power purchase agreements (PPAs).
Providing sign of relief, MoP has asked the plants to sell their electricity in exchanges provided the existing PPA holders do not purchase this electricity.
Moreover, a committee consisting of representatives from MoP, Central Electricity Authority (CEA) and Central Regulatory Commission (CERC) has been proposed to formulate benchmark rate for power.
This benchmark would take into account entire prudent cost involved in power generation including present coal price, shipping cost and a fair margin.
The PPA holders can opt to make payments according to the benchmark price or at a rate mutually negotiated with the power company.
Current status
Gujarat-based Sikka power plant, designed to run on imported coal, has resumed operations after a gap of 6 months in April, 2022. However, imported plant units with capacity close to 8,000 MW still remain out of service as on 4 May, 2022.
Total power generation from these plants was recorded at 5,039 million units (MU) in Apr’22, down 22% y-o-y from 6,456 MU in Apr’21.
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