In its comments on power ministry's draft note for supplying coal to power plants commissioned after 2009, the Finance Ministry, according to sources, has stated that the proposal presents a moral hazard of treating entities that had come up without fuel supply commitment on par with those that had such commitments.
The Power Ministry had proposed that coal be supplied by Coal India Ltd (CIL) to plants that have come up or are about to be commissioned, without any prior commitment of coal. It had proposed to supply coal to the extent of 50 per cent of the requirement to plants with aggregate capacity of about 18,000 MW.
In case of plants that have come up on biddable tariff basis and other units, coal should be e-auctioned by CIL.
Sources said the Finance Ministry suggested that CIL should provide coal on 'best effort basis' to those thermal power projects which have signed fuel supply agreement (FSA) with the state-run firm and have Power Purchase Agreement (PPA) in place.
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The Finance Ministry made the suggestion because CIL is unable to meet its annual FSA commitment. And as FSAs are legally binding documents any slippage in commitments could leave CIL open to legal action.
In August, Power Ministry had floated a Cabinet note for pooling of imported and domestic coal for deciding the price of the raw material for plants commissioned after 2009, a proposal aimed at meeting increasing demand for the dry fuel.
As per the Power Ministry estimates, if the pooling is confined to post-2009 plants the resultant increase in per unit cost of power generation is expected to be 74 paise for 2014-15, 44 paise for 2015-16 and 5 paise for 2016-17.
The net coal requirement works out to about 433 million tonnes (MT) in the current year, about 500 MT in 2015-16 and about 548 MT in 2016-17.
As per latest official data, as many as 47 thermal power stations in the country, of the total 104, have less than a week's stock at their disposal.