Private power producers in the country are irked by their experience in procuring coal under the Scheme for Harnessing and Allocating Koyala (Coal) Transparently in India (SHAKTI). According to the players, the supply of coal has been far from satisfactory.

SHAKTI is the new methodology approved by the government to centralise the process of allocating coal to thermal power plants. The policy was approved in May last year and there had been one round of bids under the scheme for coal-based power plants with power purchase agreements in September. But industry players allege that the winners have not been getting the desired coal supplies even months after being awarded the bids.

However, Susheel Kumar, Secretary, Coal Ministry, brushes aside the allegations, saying that before competing for a Power Purchase Agreement (PPA), the companies will have an idea at what cost they will get coal. “This will allow them to make a more informed bid for supplying power,” he said.

Refuting allegations that there was delay in supplies, Kumar said, “According to the SHAKTI policy, power companies will have to get their PPAs amended within 45 days to factor in the lowered cost of coal attained after bids. Some winners then approached the government seeking a relaxation in deadline to 90 days, citing delays in getting their PPAs updated at the regulators.

“We even allowed the winners to start taking the promised coal if the state governments give a guarantee that the lowered coal costs will be passed on in the form of lower tariffs,” he added. Ashok Khurana, Director-General of the Association of Power Producers, said, “The Coal India approach of taking advance payment for all e-auction coal under rail/road mode without committing to any assured supply has resulted in outgo of huge cash from (power plant developers) without translating into coal supply. This has resulted in huge advance accumulation of funds, thus creating cash flow problems for already stressed projects without any visibility or plan of coal supply.”

Payment-supply link

“CIL should link payments with definite coal supply plans. No further advance should be taken till supply backlog is cleared,” he added. Officials from one of the power producers that had secured a coal supply commitment said, “The supplies started a few days ago and there has been a delay in some cases because of compliance issues.” Despite troubles persisting from the initial round of auctions, the government is firm in going ahead with the next round of bids, but with difference. This time the government is expected to conduct a forward auction and those without PPAs are also allowed to bid. This too has worried a section of power producers.

Sanjay Sagar, Managing Director, Jindal Power, said, “Since securing the PPA is not in the hands of the bidders who will bid for coal, a lot of them may end up losing their earnest money deposit in the face of no new PPAs coming into the market.”

Rajiv Agrawal, Secretary, Captive Power Producers Association, said, “For the last one year, under the direction of the government, coal rake supplies to Captive Power Producers (CPP) and industry away from CIL coal mines is negligible and Independent Power Producers (both state, centre controlled and private ones) are getting 110-200 per cent of linkages.”

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