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Import coal in time or face penalty: govt to power generation firms

With monsoon months coming when coal production slides and availability of fuel at plants suffer, the power ministry fears that current power crisis may further get aggravated in coming months and therefore is preparing in advance for maintaining coal supplies would be essential.Premium
With monsoon months coming when coal production slides and availability of fuel at plants suffer, the power ministry fears that current power crisis may further get aggravated in coming months and therefore is preparing in advance for maintaining coal supplies would be essential.

  • The direction from power ministry comes in wake on reluctance shown by some gencos to import coal as its prices are still hovering close to three times the price of similar grade coal in the domestic market

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As part of its efforts to contain power crisis in the country triggered by unusual heat conditions and a sudden spike in demand, the Power Ministry has issued directions to all generation companies (Gencos) to place orders for coal imports by May-end or face the prospect of being declared a defaulter that will burden thermal units to import higher quantum of coal for blending upto October 31, 2022. 

The direction from power ministry comes in wake on reluctance shown by some gencos to import coal as its prices are still hovering close to three times the price of similar grade coal in the domestic market. Even with earlier directions to gencos to import upto 10 per cent of fuel requirement, only central utility NTPC and a few state generation utilities of Maharashtra have placed orders and received imported coal consignments. 

With monsoon months coming when coal production slides and availability of fuel at plants suffer, the power ministry fears that current power crisis may further get aggravated in coming months and therefore is preparing in advance for maintaining coal supplies would be essential. 

Power ministry has issued direction to all gencos that if the orders for import of coal for blending are not placed by Gencos by 31.05.2022 and if the imported coal for blending purpose do not start arriving at the power plants by 15.06.2022, all the defaulter Gencos would have to import coal for blending purpose to the extent of 15% (in order to meet shortfall of imported coal for blending purpose in Quarter1 i.e. Apr-June 2022) in the remaining period upto 31.10.2022, a power ministry statement said. 

The statement further added that not much blending has taken place in the months of April and May 2022, the power plants (who have not yet started blending by imported coal) will ensure that they blend coal at the rate of 15 % upto Oct 2022 and thereafter at the rate of 10% from November 2022 to March 2023.

The power ministry has also written letters to State Secretaries/Principal Secretaries and all Gencos in which it has said that keeping in view the likely less materialization of coal supply from domestic sources as compared with the requirement to meet power demand, domestic coal will be allocated proportionately to all Gencos based on likely availability from 01.06.2022 and the balance requirement will need to be met from imported coal for blending purpose and target set for production in captive coal mines.

If blending with domestic coal is not started by 15.06.2022 then the domestic allocation of the concerned defaulter thermal power plants will be further reduced by 5%, the letter mentioned. 

Power minister R K Singh has also written to state chief ministers asking them to direct their Gencos to take immediate steps to import coal for blending in order to meet their requirement during Monsoon season. The Minister, in separate letters to Haryana, Uttar Pradesh, Karnataka and West Bengal, has expressed concern that tender process for coal import has either not started or not completed in these states.

With the new guideline being put in place, revised allocation of domestic coal for the month of July, 2022 onwards will be conveyed based on the above methodology. All Gencos have been advised to ensure adequate stocks at their power plants for smooth operation until October, 2022.

The power ministry has further directed that the imported coal based plants should run and the State should import coal for blending, as in the previous years. 

Earlier, Ministry of Power had issued directions under Section 11 of the Electricity Act that all the imported coal-based plants start running and most of them have started running. But, the import by States of coal for blending is still not satisfactory. In 2018-19 a total of 21.4 Million Tonnes (mt) of coal were imported for blending. In 2019-20, the total import for blending was 23.8 mt whereas in 2021-22, it was only 8.3 mt. The centre has identified this as the prime cause of the stress in the availability of coal.

Ministry of Power (MoP) on 07.12.2021 had issued advisory to all domestic coal-based power plants to import coal to meet their requirements by blending with imported coal to the extent of 4 % by State Gencos & Independent Power Producers (IPPs). MoP had issued the revised advisory on 28.04.2022 for importing coal for blending purpose to meet the requirement at 10% of the total requirement by 31.10.2022. The requirement for blending for each Genco and IPPs at 10% was also intimated and it was advised to place the awards for import of coal (for blending) by 31.05.2022 in order to ensure that 50% quantity is received by 30.06.2022, 40 % quantity by 31.08.2022 and 10% quantity by 31.10.2022.

In his letter to chief ministers, Singh has further asked that State Gencos may lift entire quantity of coal offered under RCR (rail cum road) mode expeditiously to build coal stock. He stressed that in case of failure on either account, it would not be possible to give additional domestic coal to make up the shortfall. 

The minister added that if RCR allocation is not lifted it will be allocated to other needy State Gencos and if present state of affairs continues it may lead to shortage of coal in states during monsoon adversely affecting the power supply situation in the States. 

Singh highlighted that due to increase in demand and consumption of electricity, the share of coal-based generation has increased and the total coal consumption by power plants has also increased. He added that materialization of domestic coal is only about 88% of total requirements. In order to ensure minimum required coal stocks in power plants before the onset of monsoon, Minister has directed that the thermal power plants owned by State Gencos and IPPs must use all the sources to maintain adequate coal stock.

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