The coal ministry has assured the power ministry that it would consider diversion of a part of e-auction coal to power plants facing fuel shortage. E-auction is very lucrative for the country?s largest coal producer, Coal India Ltd (CIL). Once operationalised, this could improve coal availability for power plants by up to 40 million tonne per annum, enough to run power plants of 10,000 mw capacity. But it would adversely impact the revenue of CIL, which earned over 17% of its revenue by selling just 10% of its total annual production under the e-auction route.
?We have been asking the coal ministry to meet coal requirement of the power sector before e-auctioning the fuel. Now the coal secretary has assured us that power producers can also get this coal without having to participate in e-auction, provided they agree to lift the coal from pitheads,? the power secretary told FE.
?Coal will be available at CIL?s price but modalities on quantity and location ( from where coal has to be lifted) are yet to be discussed,? Uma Shankar added.
However, the coal ministry is yet to take a final call on the issue. ??If power ministry wants some priority in the e-auctioning of coal, we will definitely consider it. But if they say they do not want e-auction at all, we can not do it,?? coal minister Shriprakash Jaiswal told reporters on Wednesday.
CIL 10% ( or about 40 million tonne) of its coal production through e-auction during the financial 2010-11 The price realisation from sale of coal through e-auction was about 85% higher compared to coal supplied by the company under long-term linkage.
Private power producers have welcomed the government?s move. Power plants worth 18,000-20,000 mw capacity developed by private players are facing serious coal shortage as the CIL has not signed any fuel supply agreement post March 2009.
?We welcome this move by the government. It will go a long way towards resolving the coal crisis,? Ashok Khurana, director general, association of power producers, said. APP is a representative body of private power project developers with capacity of over 100 giga watt under construction.
As a long term move, the coal ministry is working on a proposal where captive coal mine owners would be allowed to sell surplus coal from their blocks using CIL?s e-auction platform. This would not only help to protect revenue stream of the CIL, but also significantly improve availability of the fuel for power plants.
Earlier, addressing the conference, Uma Shankar said that the group of ministers (GoM) set up by the government to suggest ways to augment domestic fuel availability for power projects and improve the financial conditions of the distribution utilities has accepted the power ministry?s suggestions to allow utilities to undertake tariff revision periodically, rather than as a one-off exercise.
The GoM, which is headed by finance minister Pranab Mukherjee, has also made suggestions for fast track clearances for allocation of coal blocks to the private sector and simultaneous forest and environment clearances to expedite the availability of coal to the power sector.
While speaking about fuel shortage for the power sector on this occasion, Ficci president Harsh Mariwala said the the crux of the problem is that the fuel sector has failed to keep pace with power sector reforms.
He called for implementing on an urgent basis key reform measures, including setting up of an independent regulator, delinking mining from end use, competitive bidding for allocation of coal blocks and privatising CIL.
India electricity, an annual event which includes exhibition and conference, is being held by Ficci in collaboration with the power ministry for last six years. Issues like fuel management, regulatory reforms, distribution reforms, power market, project financing and energy efficiency will be discussed during the three-day event.