PSUs, private firms can now swap coal allocations1 min read . Updated: 22 Dec 2016, 04:30 AM IST
Initially, fuel swapping will be allowed among power companies and later extended to other industries too
New Delhi: Coal and power minister Piyush Goyal on Wednesday cleared a plan to allow state-owned and private companies to swap their allocations of coal so that power plants can source the fuel from the closest available location and improve power generation efficiency.
“Today I have approved the proposal. Henceforth government and public sector companies can swap their coal with private companies. I would like it to be across sectors that require coal as a fuel," Goyal said at a function organized by Power Grid Corp. of India Ltd.
Initially, fuel swapping will be allowed among power companies and later extended to other industries too.
The cabinet had on 4 May decided to allow coal swapping within a central, state and a private group company to improve efficiency and Wednesday’s decision takes it a step further by allowing swapping between the plants of a government and private company.
A statement from the power ministry said the modalities for use of transferred coal in Independent Power Producers’ (IPPs) generating stations will be issued separately. Power secretary P.K. Pujari, who was present on the occasion explained that power generation firms with old and inefficient plants can bid out their coal allocation to those with efficient ones, who would produce power on behalf of the original allottee.
The Narendra Modi government has taken several steps to improve the availability of coal to power plants, with the result that power plants now have supplies to last for nearly a month, from what used to be critically low levels of fuel availability about two years ago.
However, since state power distribution companies, which are being turned around with a debt restructuring scheme, will need more time to improve their financial health, power demand growth has not kept pace with the increased availability of coal, which has led to an artificial surplus of coal.
Goyal also suggested on Wednesday that Power Grid Corp. should consider monetising some of its assets to unlock capital. “I think it is time now for Power Grid to seriously look at moving out of becoming an asset holding company into a project management, implementing company," the minister said. An official, who spoke on condition of anonymity, explained that the company was highly leveraged and could reduce its debt, which will make it lean and more nimble.