At a time when private and captive power producers are demanding an assured coal supply, the Centre has asked state-run Coal India Ltd (CIL) to make “out-of-turn” allotment of scarce coal to central and state electricity generation companies.
The order follows the May 18 decision of the railway ministry to accept the request of the power ministry, wherein the latter had asked to give higher priority in coal supply to power producers (i.e. plants run by government company or private company). This decision has been strongly opposed by captive power producers of private companies as they “are already struggling with coal shortage”.
In a May 24 letter to CIL, the coal ministry stated that there may be an increased demand for coal due to a surge in demand during peak summer. Power generation in April, it said, “has been more than the programmed generation and this, in turn, may lead to a more than anticipated increase in demand of coal from the power sector.”
The ministry added in its letter: “In order to avoid possible shortage of coal at thermal power plants, it has been decided that wherever it is operationally feasible based on various factors like coal stock availability, where suitable transport arrangements are in place etc, out-of-turn coal allotment may be made to state and central PSU (public sector unit) gencos (generation companies) to meet the surged coal requirement for power generation.”
Private power generation companies are running on low plant load factors (PLFs) as compared with state-run generation companies. PLF is a ratio of output of a plant to the maximum output it could produce. According to the Central Electricity Authority, the PLF for private plants has fallen from 56.96 per cent in October last year to 52.29 per cent in March this year. However, the PLF of the Central government-run power plants has improved from 69.17 per cent in October 2017 to 78.47 per cent in March 2018. State government-owned power projects witnessed significant jump in utilisation of their installed capacity to 68.66 per cent in March 2018, compared with 54.35 per cent in October 2017.
Ashok Khurana, director general, Association of Power Producers said: “Discrimination based on ownership of assets puts into question the sanctity of commercial contracts signed by CIL. This would lead to more stress for the bankers. This is against the PM’s (Prime Minister’s) stated policy of level-playing field and the ease of doing business.”
On May 18, the Railway Board wrote to all of its zones: “In view of critical coal stocks with power plants, (the) Ministry of Power has requested for granting of higher priority in loading of coal for power houses from goods sheds so as to facilitate higher supply of coal to power sector.” The Board accepted this request and asked its zones to give higher priority to coal supply to power houses till June 30.