The coal ministry has come to NTPC?s rescue. It will reserve certain amount of coal from the e-auction stock for the country?s largest power producer, which has been hit by coal shortages.
?The special dispensation for NTPC is subject to the company agreeing to pick up coal stock on its own and make arrangement for its transportation by road. Also, the price should be market-linked,? coal minister Sriprakash Jaiswal told FE. The idea is to protect the power utility from losing out to other bidders and facing coal shortages.
Coal India India (CIL), the country?s largest producer of the fuel, uses its e-auction or electronic auction platform to sell 10% of its coal production to consumer industries offering the best price in a bidding process.
The paucity of coal supplies by CIL this month, coupled with other infrastructure problems, has created a sharp decline in coal stocks at more than a dozen NTPC stations. This has led to a decline in generation and increased load shedding by distribution entities in various parts of the country.
Last year (2010-11), CIL sold almost 42 million tonne (mt) of coal through the e-auction route, but NTPC sourced a mere two lakh tonne of the fuel using this platform.
As per the preferential auctioning process proposed for NTPC, the company would be asked for its coal requirement to see whether the desired quantity of fuel could be provided to it from the total coal available under the e-auction route. A quantity will then be fixed, which can be bought by NTPC at a price linked to the market rate of coal. NTPC will be the sole bidder under this preferential allocation system.
?This is very good development that will help us prevent short-term shortages of coal resulting in loss of generation. Coal under e-auction works out to be cheaper than imported coal,? said an NTPC official, asking not to be named.
E-auctioned coal fetched 85% higher prices for CIL than those offered to customers under the notified prices determined by state-owned coal companies and the government. The e-auction of 10% of the CIL?s production accounts for over 17% of its total revenue. ?We will have to see how under a preferential system e-auction coal is priced for NTPC. It should not impact CIL’s revenues,? said a CIL official.
NTPC currently generates 34,854 MW of power and uses close to 137 mt of coal (both domestic and imported) annually. The shortage of coal in the domestic market has forced the company to look at larger imports of coal for its upcoming projects. Imported coal is currently more than three times the price in the domestic market and every 10% use of imported coal in NTPC stations increases electricity tariff by roughly 30-35 paise per unit.
?If large quantity of coal is allowed to company under e-auction, not only will NTPC save on its fuel cost but also prevent escalation in electricity tariff,? said the NTPC official.
