NTPC units faced coal shortage in FY17-19; CERC denies relief

Company blames Coal India and Centre's no-import policy

NTPC, the country's largest power generator, has said many of its units faced a coal shortage in the past two financial years, owing to low production and the Centre’s restriction on importing it.

In a recent petition to the Central Electricity Regulatory Commission (CERC), it said this led to slippage in power availability at four of its units, leading to less payment from states. CERC denied any relief to NTPC, saying power purchasers should not pay for the generator's fuel supply risk. The order, though, has spotlit the coal shortage issue, on since 2016. 

NTPC petitioned CERC for relief on the Normative Annual Plant Availability Factor (NAPAF) of at least 85 per cent. NAPAF indicates the period for which a power plant is available for supplying the agreed quantity of electricity. 

NTPC said Coal India, the government-owned monopolist, was to blame for its below-optimum production, apart from the no-coal import policy the central government had announced in 2015. 

Any slippage from NAPAF affects the fixed cost payment to NTPC by states. Of the rate charged by NTPC, the variable component is fuel cost. States which sign a power purchase agreement with NTPC have to mandatorily pay the fixed cost, even if they don’t buy power. However, if the generator slips on plant availability, a portion of the fixed cost is deducted.

 In the last two financial years, NTPC could not recover full annual fixed charges at units which faced a coal shortage. The governments of Gujarat, Maharashtra, Madhya Pradesh, Andhra Pradesh, Telangana, Karnataka, West Bengal and Kerala were in dispute with NTPC on the issue. During the hearing, they, especially Gujarat, argued NTPC alone should bear the risk on fuel availability. 

Some states also said NTPC units were not supplying because of increased availability of renewable power. 

CERC also rejected the request of NTPC to ensure and regulate coal supply during peak demand periods. This, it said, was not in its purview. “There has been significant shortage in availability of coal and there is uncertainty of assured coal supply on a sustained basis from April 2017,” went the NTPC petition.

As mentioned earlier, it also blamed the Centre’s policies. It cited the New Coal Distribution Policy (NCDP-2013), wherein assured domestic supply was restricted to 65 per cent of the annual contracted quantity (equivalent to 85 per cent generation level). It also highlit the coal ministry's decision of 2015 to prohibit the supply or use of imported fuel in central public sector power plants, including those of NTPC. NTPC said the coal shortage was aggravated by constraints in transportation, owing to rail congestion and placement of rakes at mines.

Last year, the country’s peak power demand touched a record high of 170,000 Mw. Power units across the country faced a coal shortage, with some having only a day's stock. The ministry of power in an internal note also acknowledged that coal shortage had led to generation loss in 2018-19. 

This January, the Union power ministry allowed NTPC and states to import coal.