CIL’s offer of 12MT coal for contract auctions inadequate, say Power companies

Coal India will offer about 12 million tonnes of coal in the current long-term contract auctions, which power companies say is inadequate. It is offering fuel to plants without power purchase agreements (PPA) or coal supply pacts. Ten plants with total capacity of 8 GW requiring 36-40 million tonnes are eligible.

Power producers say the meagre supply will raise prices and help Coal India get a premium of Rs 500 crore but the supplier says it is making the best possible offer for the scarce resource.

Power producers will have to sign PPAs within two years of the auction, failing which the contract will be terminated and bid security of Rs 1 crore per 100,000 tonnes will be forfeited. The risk of losing the security deposit is high because states are reluctant to sign PPAs, a power sector executive said. This would worsen the finances of power firms, the executive said.

The Association of Power Producers has estimated that the demand would be 3.5 times supply, and wants the government to test the market response from stakeholders before conducting such an auction. A senior Coal India executive said the auction is not being conducted in a surplus situation as the company has many supply commitments.

“Taking into account availability of coal at its subsidiaries and their current commitments under different contracts, the most optimistic offer has been worked out and offered by Coal India.”

ET Energy World
Show More

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button