Power generation utilities are under pressure with the new coal distribution policy in place.
Sunil Mitra, West Bengal?s additional chief secretary-power, on the sidelines of a Confederation of Indian Industry (CII) seminar, said besides a Fuel Supply Agreement (FSA) which binds power utilities to lift 90% of the agreed quantam of coal from the supplying company, a memorandum of understanding (MoU) has to be signed with it to lift coal mined from underground mines at an import parity price.
While the coal supplied under the terms and conditions of FSA would be supplied at notified price, which is Rs 1100 per tonne at present, the coal from underground mines supplied under the terms and condition of a MoU would cost Rs 5,900-6,000 per tonne.
Mitra said although coal from underground mines is of superior quality, that would increase the input cost of power generating companies.
Further, the Union government has ordered that 20% of a power utility?s total requirement of coal has to be imported, which further puts pressure on the cost of production, Mitra said.
West Bengal Power Development Corporation Ltd (WBPDCL) and Eastern Coal Fields Ltd (ECL), a CIL subsidiary, signed an MOU on Wednesday for supplies of coal from underground mines as well as entered into an FSA following NTPC’S signing of model FSA with CIL last month.
While the model FSA, which has kept a trigger level of 90%, (both the supplier and consumer have to stick to the condition of supplying and lifting 90% of the total agreed amount or else it will attract penalty) initially covered 15 power generating stations of NTPC Ltd, generating 23,395 mw, it will gradually be applicable to all thermal generating utilities across the country, currently having a total installed capacity of 93392.64 mw.
Although Mitra could not say the quantam of coal PDCL would have to buy domestically at Rs 5900-6000 per tonne, he said pressure on costswould come on all power utilities across the country.
To produce around 3400 mw, WBPDCL currently requires 20 million tonnes of coal a year, of which around 14.5 mt come from CIL subsidiaries ECL, Bharat Coking Coal Ltd (BCCL) and Mahanadi Coalfields Ltd (MCL).
While ECL supplies 60% of 14.5 mt, BCCL and MCL supply the rest. Mitra said that the FSA has to be extended to BCCL and MCL too.
S Mahapatra, chairman, WBPDCL, earlier told FE that coal accounted for 70% of power production cost and any increase in cost of coal would impact the cost of generation. Asked whether it would be passed on to consumers or not, Mitra said that depended on the regulator.
Malay Kr Dey, chairman, West Bengal State Electricity Distribution Company Ltd (WBSEDCL), said WBSEDCL expects a total revenue of Rs 9,000 crore in 2009-2010 against Rs 7,600 crore in 2008-09, although the financial results for 2008-09 are yet to be declared.
He said power exports, which fetched good revenue to the company in 2007-08, has been very poor in 2008-09 and of the 3,000 million units of export, which the company has targeted in 2009-2010, only 150 million units have been exported in the first quarter of the current fiscal.
?The power market is very volatile. While prices last week went up to Rs 14 per unit, on Wednesday there was no demand and WBSEDCL couldn’t export a single unit,? Dey said.
