Discoms for compulsory purchase from ICB plant

The Union Ministry of Power may enforce Section 11 of the Power Act, 2003 to make it mandatory for state-run power discs to purchase power generated from imported coal. The move follows the reluctance of discs to purchase expensive power from imported coal-based (ICB) units, which the ministry had earlier directed to run at full capacity under the same department.

Profitable spot market sales were one of the incentives given to ICB units in addition to the promise to pass-through costs. However, things have not moved very much to the ground as most states are reluctant to enter into agreements with the ICB due to financial constraints.

Spot electricity prices have halved on the India Energy Exchange in the last one week from Rs 11 per unit, thanks to lower demand.

According to sources, Power Minister RK Singh has hinted at issuing a directive to the discs at a review meeting with ICB units in New Delhi.

Gencos told the meeting that there were very few buyers of high-priced power among the discoms and that spot market sales had also become less profitable as prices fell.

The minister told Jenkos that orders for the discs would be passed by Sunday or Monday.

A Genco official who attended the meeting said that the directive of the power ministry could be complied with only if the cost of imported coal is complete and pass-through without any lawsuit.

Advance payments by Discom are also required as working capital support, he said. He also noted the continued reluctance of lenders to extend any new loan facility to ICB units.

On May 5, the ministry mandated imported coal-based Zencos to run at full power, while other Zencos were asked to mix 10% of their imported coal.

In view of the critical situation of coal reserves in the country, Singh has asked all stakeholders to take the instructions seriously.

He told Jenkos that they would have to import 15% coal instead of 10% and that their internal quota would be reduced by 5% if they did not comply with the import order.

The Centre’s initiative aims to introduce 8,000 MW of ICB capacity.

Among the power producers, Tata Power Company, which has a 4,000-megawatt plant in Mundra, has already moved to the Central Electricity Regulatory Commission (CERC), demanding higher tariffs than set by a select committee, with Essar Power’s 1,200-megawatt plant ready to start operations.

Speaking to FE, an official at Essar’s Salaya plant said the company would soon sign a tripartite agreement with the lender and Gujarat Energy Development Corporation Limited (GUVNL). However, he said that the tariffs set by the panel of ministers need to be revised due to the দাম 8-10 / ton increase in the price of coal imported from Indonesia from April 28.

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