Fri. Mar 29th, 2024
Source: ET

Altering its stand on domestic production, the government has asked thermal power units to import up to 10% of their coal needs owing to the prevailing fuel shortages, while the coal and power ministries will explore ways to further enhance supplies. At the same time, the centre has also warned states that they will be penalised if they are found selling unallocated power from central generating stations on power exchanges at expensive rates.

Secretaries of coal and power ministries at a review told the Prime Minister’s Office (PMO) that coal dispatches to power plants have exceeded daily consumption. Coal dispatches to thermal power plants rose to 1.95 million tonnes on October 11 against the consumption of 1.9 million tonnes, according to sources. It added that dispatches are expected to increase to 2 million tonnes a day and the situation is expected to improve soon.

Several north Indian States like Bihar and Jharkhand had to impose power cuts for up to 14 hours a day as economic activities started reviving post the second Covid-19 wave. This has driven up demand for coal leading to a supply shortage.

Power producers functioning under government like NTPC Ltd. sign long-term power-purchase agreements with distribution firms for the sale of most of their power output. But 15% of their power is controlled by the Centre, called the “unallocated power” which the centre sells to the states.

Several power distribution companies are panic buying on the power spot market, taking spot prices to record highs of Rs 20 per unit (kilowatt-hour, or kWh) – the ceiling price in the day-ahead market.

The Ministry said “if any State had a surplus of power, it should inform the federal government which would allocate that electricity to States that needed it. Some States, instead of supplying electricity to consumers, are imposing rolling power cuts and selling power at higher prices to energy exchanges,” in a statement.

All thermal power plants have the capacity to accommodate around 20 percent imported coal, but on the back of increasing domestic coal availability and less generation capacity utilisation, and as part of the Aatmanirbhar Bharat initiative, importing was has been halted for the past 4-5 years.

A senior government official told Economic Times on inquiry that the cost of imported coal can be passed on to consumers, but electricity generating companies said importing coal at prevailing high prices and at short notice was not possible. The power stations also need approval from distribution companies to import coal for blending.

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