Stressed power plants to get a helping hand from the govt

PFC and REC have been asked to offer short-term loans to stressed plants to help them restart production (Photo: Mint)
PFC and REC have been asked to offer short-term loans to stressed plants to help them restart production (Photo: Mint)


The govt wants domestic plants to stock up on coal before the monsoon season when mining is affected

NEW DELHI : The government has directed state-run Power Finance Corp. (PFC) and REC Ltd to offer short-term loans to stressed power plants using imported coal to help them restart production, as part of efforts to tackle a power crisis that has triggered widespread blackouts and threatens to hurt economic growth.

“These plants need working capital to buy coal and start generating power," the Union power ministry said on Wednesday.

Separately, the coal ministry may regulate fuel supply to states whose discoms continue to buy cheaper electricity from domestic coal-fuelled plants despite agreeing to buy power from imported coal-fired plants. Rising global fuel prices have made electricity from plants that rely on imported coal more expensive, crimping demand from the country’s struggling power distribution companies.

Scorching temperatures across India have led to soaring electricity demand to run air-conditioners even as power plants face severe coal shortages. Many states have been resorting to blackouts for several hours a day, unable to cope with rising power demand. The power situation may deteriorate further over the next few days as several parts of India stare at heatwave conditions.

India reported a record peak power demand met of 207.111GW and a peak power shortage of 10.77GW on 29 April. On Tuesday, the peak demand was 194.78GW, according to data from state-run Power System Operation Corp. Ltd (Posoco), which oversees the country’s critical electricity load management functions.

The power ministry’s directive to PFC and REC to assist imported financially stressed coal-fired plants comes after the government invoked Section 11 of the Electricity Act to make it compulsory for all such plants to generate power at their full capacity to avert an energy crisis. While 10 gigawatts (GW) of imported coal-fired capacity has started generation, around 7.6GW is still idle, primarily on account of high imported coal fuel prices and the financial inability to buy fuel because of pending payments from state-owned electricity distribution companies (discoms). All domestic coal-based plants have also been directed to import coal to meet at least 10% of their requirements.

Queries emailed to the spokespeople for PFC and REC on Monday remained unanswered.

“While electricity from imported coal-based projects is coming to discoms at over 7 per unit, that from plants using domestic coal is around 3-3.5 per unit. If states having power-purchase agreements fail to buy power from imported coal-based projects and schedule electricity largely from domestic coal projects for meeting demand, it would add further pressure on such projects," a government official said, requesting anonymity.

Indian power plants witnessed a sharp depletion of fuel stocks last September as 14 imported coal-fuelled power projects reduced output because of a spike in coal prices. As a result, electricity demand from domestic coal-fuelled power projects surged.

The government also wants domestic coal-based plants to stock up on coal before the monsoon season when mining is affected because of rain. India’s power plants burn around 2 million tonnes of coal a day.

“The contracted capacity for import-based thermal power stations is 20.27GW, which at 80% plant load factor (PLF) should be generating 390 million units of electricity. But due to the lower capacity utilization of these plants, the present daily generation is just about 160 million units. The government official cited above said that this is also impacting domestic coal demand by 152,000 tonnes a day, or 4.7 million tonnes (mt) per month," the government official cited above said.

On Tuesday, ICRA said that imported coal is expected to increase the power supply cost by up to 5% this fiscal year, resulting in higher electricity tariffs.

According to data from the Central Electricity Authority (CEA), the 173 power plants that it tracks have coal stock of 20.93 mt, close to only around a third of the required stock of 66.49 mt. A total of 85 power plants fuelled by domestic coal had less than a fourth of their prescribed fuel stock and were at a critical level. Also, 11 plants running on imported coal had critical coal inventory as of 10 May.

Rituraj Baruah in New Delhi contributed to this story

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