Private power producers sulk over priority to PSUs in coal allocation

Thermal power producers allege breach of FSA even as Coal India denies charges of favouritism

Private power generators are peeved over the skewed priorities in allocation of coal. They alleged that public sector players are prioritized in coal supplies, leaving their private counterparts in a quandary.

What's more, private thermal power producers claim coal distress is growing as Coal India Ltd (CIL) and its flagship subsidiary South Eastern Coalfields (SECL) are violating the terms of the Fuel Supply Agreement (FSA) inked with them to favour thermal power plants (TPPs) in the public sector. 

“SECL is currently supplying coal on priority to Marwa TPP in clear violation of provisions of Ministry of Coal policy that directs coal companies to supply to bridge linkage capacities on 'best effort basis' and after fulfilling all FSA commitments. In another implicating instance, SECL supplied excess coal and additional rakes from its Korba coalfield to public utilities to build plant stock. This is when many private TPPs are running with a critical or supercritical coal stock and also facing supplies below contractual obligations.  In October 2018, the daily loading of coal rakes for public TPPs from Korba coalfield saw an increase to 16.8 from 7.7 rakes per day, while that of private TPPs saw a fall to six rakes per day from 11.1," said an industry source.

CIL denied the allegations, ruling out any favour shown in distribution of coal to the public sector generating utilities. During April-February period of this fiscal, coal supplies to central sector power plants, state public utilities and Independent Power Producers (IPPs) was 90 per cent, 79 per cent and  72 per cent against the minimum assured supply level of 84 per cent, 86 per cent and 76 per cent respectively. 

“ACQ (annual contracted quantity) materialisation of central sector power plants is more in comparison to state public utilities and IPPs because of more number of pit-head power plants, where procurement of coal is higher as against the long distance power plants. Overall supply made under FSA to power stations encompassing all the three categories of GENCOs (generating companies) has been around 81 per cent against the trigger level of 83 per cent”, CIL said in response to Business Standard's queries by email.

CIL held that in case of state owned utilities, the slippage from trigger level was more than the IPPs.

The coal monolith also sought to trivialize charges over skewed supplies from SECL. “Many of the central sector players and state public utilities are situated in close proximity to Korba fields, procuring huge quantity of coal through captive mode of transportation. Even state public utilities outside of Chhattisgarh and Madhya Pradesh have been procuring coal through road-rail washery mode which also involves substantial quantity of coal from the Korba field. In terms of ACQ materialization, private power companies are much better placed in comparison to state government owned power utilities”, it said.

Data from CIL shows the central sector power plants got 92 per cent of supply against the trigger level of 83 per cent whereas IPPs got 75 per cent compared to  76 per cent trigger level. The slippage for state governments owned generators was more glaring as they received 75 per cent of the coal vis-a-vis the trigger level of 86 per cent.