The Govt has warned Adani Power, Tata Power and Essar Energy of legal action if they fail to ramp up production and help ease pressure on power plants running on locally sourced coal, two people aware of the development said
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The power ministry has warned Adani Power Ltd, Tata Power Co. Ltd and Essar Energy, three of India’s large imported coal-based power producers, of legal action if they fail to ramp up production and help ease pressure on power plants running on locally sourced coal, two people aware of the development said.
“Not stocking fuel stocks or not giving availability on any pretext is inexcusable. Such conduct on the part of the seller should be immediately responded to by the procurer sternly by using all possible contractual and other available legal interventions at the level of state government," according to the minutes of a 7 October meeting called by power secretary Alok Kumar with representatives of the power producers and officials of Gujarat, Haryana, Rajasthan, Maharashtra and Punjab.
The meeting was called after some power plants failed to declare their availability for generating electricity. These firms have a combined 11.8 gigawatt (GW) of imported coal-based capacity. Coal-fuelled capacity accounts for 202.80GW of India’s installed power generation capacity of 386.88GW.
“If any gaming is noticed on the part of the seller such as not supplying under PPA (power-purchase agreements) and selling in the market, it should be brought to the notice of the regulatory commission without any delay under intimation to the ministry of power for immediate intervention," according to the minutes of the meeting reviewed by Mint.
According to state-run Coal India Ltd (CIL), the primary reason for the sharp depletion of fuel stocks at power plants has been the ramping down of generation by 14 imported coal-fuelled power projects due to the spike in global coal prices. This resulted in electricity demand to be serviced from domestic coal-fuelled power projects, leading to an unplanned need for 10 million tonnes (mt) of coal.
“It was informed that GUVNL (Gujarat Urja Vikas Nigam Ltd) had sent a letter dated 01.10.2021 and requested the intervention of MoP (ministry of power) to impress upon Coastal Gujarat Power Ltd (CGPL) to operate Mundra Ultra Mega Power Project (UMPP) in the interest of the public at large, and this meeting was convened to discuss the issues related to power supply from imported coal-based power plants," the minutes said.
As part of the plan to meet electricity demand, imported coal-fuelled capacity is being brought online, with the government issuing guidelines on 8 October for “optimum utilization". After the meeting, states such as Gujarat and Punjab have started buying the costlier electricity from Tata’s Mundra project. “The real issue was that some companies were not declaring their power plants’ availability for generating electricity and supplying to the states. Post the meeting, that issue has been taken care of," said a person aware of the deliberations cited above requesting anonymity.
The plan drawn up by the Prime Minister’s Office (PMO) to ensure uninterrupted fuel supplies to power plants involves facilitating operationalizing imported coal-fuelled power generation capacity of 17.06 gigawatts, located along the coastal regions, to help ease the pressure on domestic coal-fuelled power projects, Mint reported earlier. “We are in constant touch with the government, with multiple conversations already taken place. We ran our Salaya plant until March this year and could not operate it further as the cost of imported coal increased twofold, making operations financially unviable. We at Essar are ready to support the nation in whatever way we can and are working closely with the government to reach an optimum solution that will help in the current crisis and at the same time enable us to commence operations at our plant in a viable manner," an Essar Power spokesperson said in an emailed response.
Queries emailed to spokespersons for the ministry of power, Adani Power and Tata Power on Thursday evening wasn’t answered till press time. Spokespeople for the state governments of Gujarat, Haryana, Rajasthan, Maharashtra and Punjab couldn’t be immediately reached.
“Secretary (power) summarised the discussions and said both, the procurer and sellers, are legally bound by the PPA in force as signed by both the parties. While the procurers are bound to pay the bills timely as per PPA, the sellers are bound to stock adequate fuel and offer availability as per PPA," the minutes stated.
According to state-run Power System Operation Corp Ltd (Posoco), which oversees India’s critical electricity load management functions, the coal-based capacity under outage due to coal shortage has reduced to 5GW on 14 October.
PTI reported that supply of coal by CIL to non-power sector has been suspended temporarily.
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