Power producers seek deferment of Shakti coal auctions

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Published: May 4, 2020 1:30:01 AM

With tepid electricity demand lowering utilisation levels of power plants, private power producers want Coal India (CIL) to defer the special auctions planned for plants without sufficient fuel supply contracts.

He gave directions to target thermal coal import substitution particularly when a huge coal stock inventory is available in the country this year (File image)Power producers said participation of bidders in the upcoming auction round, scheduled for May 8, might be restricted due to drying up of revenue inflows from state-run power distribution companies (discoms). (File image)

With tepid electricity demand lowering utilisation levels of power plants, private power producers want Coal India (CIL) to defer the special auctions planned for plants without sufficient fuel supply contracts. These auctions are conducted under the Scheme for Harnessing and Allocating Koyala (coal) Transparently in India (Shakti), which was implemented to ease supply constraints faced by power producers. As many as 10 plants with 8,346 MW capacity are eligible to participate in upcoming auctions. These include plants of Adani Power, KSK Energy, Bajaj Energy, GMR Energy.

Power producers said participation of bidders in the upcoming auction round, scheduled for May 8, might be restricted due to drying up of revenue inflows from state-run power distribution companies (discoms). Many discoms have served notices to power producers to back down their generation, and conducting coal auctions under such circumstances might leave out a number of plants with genuine need for fuel supply contracts, independent power producers claimed.

In a letter written to the Prime Minister’s Office, the Association of Power Producers has requested that auctions be extended by at least one month or “till business normalcy returns”. “Bidders who have already submitted their bid security and processing fees may be issued refund of these amounts so that these funds can be utilised for their day-to-day business operations,” the letter, reviewed by FE, said.

The Shakti scheme is seen as one of the major initiatives by the government which is hand-holding some power plants to come out of stress. Ten power plants with cumulative 9,044 MW capacity had won 25-year coal linkages of 27.2 million tonne per annum (MTPA) in the first round of Shakti auctions held in September 2017, where bidders quoting the highest discount to existing tariffs were allowed to choose their preferred source of coal supply.

Eight bidders with 875 MW capacity had won 2.97 MTPA in the second round of Shakti auctions held in May 2019.
gCoal India should conduct next round of auction only after reassessing the genuine demand for coal and verifying potential bidders transparently to avoid any speculation,” a senior executive of a power generating company said, adding that conducting the auctions now be detrimental to the overall sector at the cost of a handful plants which might gain from this.

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