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Power producers seek equal supply of coal to all plants

The coal-based domestic power sector has suggested that available fuel be equally distributed among all thermal plants, instead of old plants with less efficient operation getting 100 per cent of their requirement.

The producers are seeking supply for new projects which have come up/ready to be fired between 2009 and January 19, 2012, with a capacity of about 20,000 megawatt. In other words, the newer plants with better technology will be able to generate more power.

Though there is a perception that the Government may not agree for equal distribution and only give some leeway.

The coal and gas-based power developers, who met the senior ministers of the Government, under the aegis of the Association of Power Producers (APP), pitched for higher domestic coal supplies.

The APP said that as per the New Coal Distribution Policy, Coal India or some other canalising agency should be asked to undertake bulk imports to meet the domestic coal deficit.

They also said that in line with the gas utilisation policy, the entire thermal coal production should be reserved for the regulated sectors such as power and fertiliser, the producers said. Besides, the producers also want reservation of new coal blocks for the regulated sector and expediting coal block auctions under the new guidelines.

The producers, who are facing fuel supply constraints, said that captive mines should be allowed to sell surplus coal at prices which will incentivise additional production.

Captive blocks

Several coal blocks have been allocated to the power sector under Government and captive dispensation.

However, production from these blocks have been less than encouraging due to issues such as land acquisition, environmental and forest clearances (clarity on go/no-go areas), delay in commissioning of end-use plants and single block allocation to more than one parties.

Concerned with the imported coal pricing, they said that demand from China and India has completely altered the dynamics of ocean trade of the fuel.

Even as Indian developers have sought to hedge risks through ownership of coal mines, changes in laws in the producing countries have altered the pricing framework.

The per unit fuel cost increase due to such change in law are around `0.70-`1.00 a unit, depending on the location and technology of the power project.

Consequently, the financial viability of the imported coal-based projects has been impacted, as the current contractual framework does not provide for adjustment of these increased costs.

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