The Power Ministry on Wednesday said it has directed Power Finance Corporation (PFC) and Rural Electrification Corporation (REC) to arrange short-term loans, for six months, to those imported coal-based (ICB) power plants that are stressed and are undergoing insolvency proceedings in the National Company Law Tribunal (NCLT).

“These plants need working capital to buy coal and generate power in order to restart their operations,” the Ministry said in a statement.

On May 9, Power Minister RK Singh had held a meeting on the issues related with working capital for ICB plants which are stressed or are in NCLT. The decision to provide these short term loans was taken at the meeting.

“To restart their operations, the ICB plants which are under stress or in NCLT need working capital to buy coal and start generating power. It is directed to take necessary action to arrange short term loans for a period of six months with adequate safeguards, for such plants at the earliest,” the ministry said.

Increased power demand

In view of the increased demand and unprecedented pressure on domestic coal supplies, the ministry has already issued directions to all ICB plants on May 5 under Section 11 of the Electricity Act, 2003, to operate and generate power to their full capacity, even for projects which are stressed or under NCLT.

In a letter to states on May 5, the Ministry said power demand has gone up by almost 20 per cent in energy terms, and the supply of domestic coal has increased but is not sufficient to meet the increased demand. This is leading to load shedding in different areas. Due to the mismatch in daily coal consumption and receipt, the stocks at power plants has been declining at a worrisome rate.

Importing coal

The international price of coal has gone up in an unprecedented fashion. It is currently at around $140 per tonne. As a result of this, the import of coal for blending has gone down, the ministry added.

The Ministry has already instructed domestic coal-based (DCB) plants to import 10 per cent coal for blending. Also, to ensure that all ICB plants are functioning, the Centre has advised states that the higher price of coal should be a pass through. Most states have done that and about 10,000 MW capacity is now operating, out of the total 17,600 megawatts (MW).