Captive power plants may feed national grid

Excise duty on coal unlikely to be reduced

The power ministry is planning to tap captive generation to augment power supply to the national grid.

However, it is unwilling to concede the demand made by captive generators to reduce excise duty on coal from 16 per cent to 5 per cent. Independent power producers (IPPs) pay 16 per cent excise duty.

"Captive power plants cannot be given the same treatment as independent power producers because captive generation is mainly for private use. Only the surplus will be supplied to the grid. The fuel cost is a pass-through in the tariff. It is more rational to reduce excise duty on plants operating as IPPs," said an official.

The Central Electricity Authority (CEA) has estimated that about 41,000 Mw of power can be added to the grid by tapping unutilised capacity of captive power plants.

The exercise is aimed at ensuring that captive power plants maintain a level capacity utilisation.

Currently coal requirement for such plants varies sharply "" from 26 per cent to 176 per cent ""depending on the market demand for goods produced by the companies that own plants.

"Currently, coal linkage is not being fully utilised. The exercise is aimed at ensuring that the coal linkage provided to a plant is fully utilised and surplus power supplied to the grid," the official said.

As of now, the ministry has identified 19 plants with capacities of over 100 Mw each and 27 plants with capacities between 50 and 100 Mw , from which it expects surplus power

In addition, there are about 2000 plants with capacities below 1 MW. However, the ministry will not focus on them at present, said an official.

Given the acute power shortage especially in Maharashtra, the power ministry is working on a two-pronged strategy to increase the immediate availability of power.

One is to focus on getting additional power from captive plants, and the other focuses on improving the performance of old and obsolete plants in the central and state sectors through renovation and modernisation.

It is also focusing kon rationalising the usage of coal in power plants, and on encouraging the use of imported coal along coastal plants.