A major portion of the installed capacity of 71 GW of private coal-based independent power plants is under operational stress mainly due to absence of fuel supply agreement and power purchase pact, industry body FICCI said Tuesday. “46 GW out of installed capacity of 71 GW of coal-based IPP plants are in operational stress attributable largely to absent FSA and PPA, but also to financial and regulatory issues,” the industry body said. FICCI said it conducted a unit-wise analysis to examine the business environment in which the commissioned plants are being operationalised and the new capacities in pipeline are to be mainstreamed.
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Constraints of power purchase agreements (PPA) as well as fuel supply agreements (FSA) are majorly restricting these plants from approaching the power market and finding buyers, the study showed.
Taking together the commissioned and pipeline projects of private developers as on August 2016, aggregate coal-based capacities without FSA and PPA are seen to be in the range of 26–28 GW and 41–43 GW respectively.
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“Government has been pro-actively addressing the refinancing options of the stressed assets in the economy and new guidelines have been recently issued by RBI to recast the debt restructuring schemes and repayment schedules based on asset-liability management risk,” FICCI Secretary General A Didar Singh said.
For coal-based IPP generating plants, however, the eco-system of fuel tie-up and market access for selling power will have to concurrently improve if financial re-engineering is to have any effect, Singh said.
While the demand for power will be muted till private investments and industrial activity pick-up momentum, an immediate measure is to liberalise the regime of open access by removing the tariff and non-tariff barriers so that large consumers, when faced with unreliable and high-cost power supply, can procure directly from generators, he added.
To maximise fuel supply and supplement Coal India’s fuel production, FICCI recommended opening up of the coal sector and ushering in commercial mining.
FICCI had earlier proposed the concept of a Clearing House as a market construct for over-the-counter selling of coal under a system of daily trade monitoring and real time liability and collateral management.