Power firms seek diversion of e-auction coal to tide over fuel crunch

Anil Sasi New Delhi | Updated on March 12, 2018

Coal shortage threatens to trip the power sector.

Ahead of Thursday's review meeting on the coal shortage situation called by the Prime Minister, private power developers have stepped up the pressure on the Government to mitigate the impending fuel crunch.

Amid the looming possibility of stranded generation capacity, they have suggested a two-pronged solution to tide over the immediate crisis. This includes diverting coal from the e-auction process to upcoming projects and liquidating the coal stock lying at pitheads. These steps could free some 80-100 million tonnes (mt) of coal for immediate use.

In a petition, the Association of Power Producer (APP) — representing private developers including Tata Power, Reliance Power, Essar, Lanco, Jindal Power — has suggested diversion of Coal India's e-auction sales, specifically to projects that are coming up on assurances of fuel from the state-owned coal mining firm. During the quarter ended December 2010, it is estimated that Coal India sold around 48 mt or nearly 12 per cent of its production through the e-auction platform.

Private developers are willing to buy the coal at the price discovered through the e-auction process to ensure that Coal India's profits are not impacted. Besides, they estimate 50 mt is lying at the mine pitheads that cannot be transported for want of rail rakes. The private players have called for immediate steps to transport this stock to consumption points.

The capacity that could be directly impacted immediately by the coal shortage is around 22,120 MW, which could go up to 42,000 MW by 2016-17. “Inaction could result in stranded power capacity, leading to default on term loans, which could have a cascading impact on the financial sector as well,” a power utility company executive said.

Published on May 17, 2011

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