Power Ministry issues directions to Gencos; allows charge compensatory tariff for importing coal

New Delhi: Power Ministry has issued directions to Gencos using the powers under Section 11 of the Act today in the light of current circumstances due to a sharp increase in electricity demand. Ministry has stated that with soaring power demand and power shortage in some areas, the generation needs to be maximised.

The ministry has added that despite efforts to increase the supply of domestic coal, there is still a gap between the requirement of coal and the supply of coal, because of which the coal stocks at the generating stations are depleting at a worrisome rate.

The blending of imported coal to the extent of 10% is not happening as stipulated, and the reserve stocks of coal are continuing to dip, Power Ministry issued directions to all Gencos on May 18, 2022, that if the orders for import of coal for blending are not placed by Gencos by May 31, 2022, and if the imported coal for blending purpose does not start arriving at the power plants by June 15, 2022, the defaulter Gencos would have to import coal for blending purpose to the extent of 15% (in order to meet the shortfall of imported coal for blending purpose in Quarter1 i.e. Apr-June 2022) in the remaining period up to 31.10.2022.

The Ministry has said that domestic coal-based power plants, whose tariff has been determined under Section 63 of the Act have raised concerns about the pass-through of the increased cost in tariff if imported coal is used and have requested for a suitable methodology to determine the impact on the tariff of mandatory blending of imported coal.

The Ministry has directed that billing and payment for these plants shall be as per PPA. However, to enable Gencos to import coal with adequate cash flow, the provisional billing shall be done by the Gencos on weekly basis. Payment of at least 15% of the provisional bill shall be made by the procurers within a week from the date of receipt of bill. This provisional billing and payment shall be subject to reconciliation during final billing and payment on monthly basis as per the PPA.

In case of default of payment of 15 % of the weekly provisional bill, the generating company shall be free to sell 15 % power in the power exchange. The generating companies shall ensure blending with imported coal and maintain coal stock as per extant norms and the directions issued by the MoP from time to time.

This direction is for coal imported for blending by such domestic coal-based power plants up to 31.03.2023.