Homeeconomy News

Govt to give priority to state power producers for coal supply; pvt plants in lurch

Govt to give priority to state power producers for coal supply; pvt plants in lurch

Govt to give priority to state power producers for coal supply; pvt plants in lurch
Profile image

By CNBCTV18.COMOct 15, 2018 8:25:39 AM IST (Updated)

The government has asked Coal India Ltd and its subsidiaries to prioritise coal supply to state power producers like NTPC, leaving private electricity plants in a lurch, multiple sources said. The coal ministry has directed CIL to prioritise the coal supply to select central and state government-owned power houses under the pretext of building coal stocks at these plants.

Recommended Articles

View All

Following this, all subsidiaries of Coal India like South Eastern Coalfields Ltd (SECL) have been directed to supply coal to state power generators such as NTPC.
This has come at the cost of private power producers, who are running out of feedstock used to produce electricity.
Sources in private producers say rationally Coal India should give first priority to those plants having critical coal stocks. Next should come plants facing supplies below contractual obligations and then to most efficient plants, irrespective of ownership.
Preferential and priority distribution should not be limited to public sector, they said, adding that private power plants should not be discriminated against.
As per the sources, following the instruction from coal ministry, Coal India has its subsidiaries like SECL to supply 25 rakes per day of coal to NTPC's Korba, Mouda and Bhilai power plants and such other state power plants.
Mahanadi Coalfields Ltd (MCL) has also accorded priority supplies to central public sector plants and WCL has been verbally instructed to supply coal to only Mahagenco (formerly known as Maharashtra State Electricity Board) plants.
As a result, SECL in October increased the supplies to state and central generating companies from an average 10 rakes per day (40,000 tonnes) to 17 rakes per day (68,000 tonnes) whereas for private power plants it has reduced from an average 10 rakes per day to only 6 rakes per day (24000 Tons).
Private power generators feel such priority supply only to state and central PSU electricity generating companies is discriminatory.
This discrimination based on ownership of assets puts into question the sanctity of level playing field and ease of doing business besides being bad in the eyes of law and equity, they said.
The move comes just when the festive season has started when power demand goes up. Also, Madhya Pradesh, Rajasthan, Chhattisgarh, Mizoram and Telangana will go to polls this year.
Also, power tariff in spot market have hit a record high past few days. In last week of September, spot electricity price touched nine year high of Rs 14.25 per unit and swelled further to Rs 18.20 in the first week of October on Indian Energy Exchange.
This spark in power tariff was attributed to inadequate coal supplies from Coal India, the sources said.
While domestic coal production during April-September has risen to 256 million tonnes from 232 million tonnes in the year ago period, increased power demand has meant that coal imports have also risen to 119 million tonnes from 105 million tonnes in April-September 2017.
Coal imports in September were 21 million tonnes as compared to 16 million tonnes a year ago.
On October 8, SECL wrote its operational heads that following a September 24 meeting chaired by Coal Minister Piyush Goyal, it has been decided to "prioritize the supply of coal" to 11 public sector generators including NTPC.
Check out our in-depth Market Coverage, Business News & get real-time Stock Market Updates on CNBC-TV18. Also, Watch our channels CNBC-TV18, CNBC Awaaz and CNBC Bajar Live on-the-go!