Jindal Power continues to sell electricity from its Tamnar power plant on a merchant basis, ignoring the coal ministry?s recent directive that stipulates that power plants running on captive coal must not quote a higher price for power supply in tariff bidding than those offered by generating stations based on fuel linkage from Coal India.
JPL, a subsidiary of Jindal Steel and Power, has quoted a R5.27-a-unit price to supply power to APCDPCL, an Andhra Pradesh discom, from its Tamnar plant based on captive coal, compared with R4.29 and R4.4 a unit offered by KSK Mahanadi and Corporate Power plants running on coal supplied by CIL under long-term linkage, according to industry sources.
A query to the company did not elicit any reply. The ministry has directed plants based on captive coal blocks to desist from selling power on a merchant basis and, instead, participate in bidding for power supply as per the National Tariff Policy.
The ministry’s directive also stipulates that such power project developers must not quote a higher price than those offered by plants based on fuel linkage from CIL. In other words, developers must not profiteer from power generated using cheaper coal from allocated mines.
The ministry has issued the directive to defuse the political controversy generated by the Comptroller and Auditor General?s observation that private companies reaped windfall gain of R1.8 lakh crore between 2004 and 2009 due to the government?s failure to allocate captive coal blocks through the auction route.
APCDPCL has floated tender for the supply of 2,000 mw power for three years, which has elicited offers from over a dozen power companies, including JPL.
JPL has been making hefty profits by selling entire power from the 1,000-mw Tamnar plant on a merchant basis. For example, in the April-June 2012 quarter, JPL earned profit after tax of R314.39 crore from revenue of R750.45 crore, which translates into profit margin of 41%. But during the same period, NTPC earned profit margin of just 15%, which is close to the industry norm, according to industry experts.