Regulatory delays after auction hit CIL supplies to power companies

Coal India has not commenced supplies from the auction for power companies with electricity sale agreements held last June although the Centre has initiated the process for the next auction.

A Coal India executive said only one of the companies that won the auction had submitted the necessary documents. Industry executives blamed regulatory and procedural delays, which are hurting the alreadystressed power producers.

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“Post-auction conditionality should be minimised. These are cumbersome and time taking and not always in the hands of the generators. Producers need to depend upon state utilities and regulators for necessary approval, which takes a lot of time… These conditions need to be reviewed,” Ashok Khurana, director general at the Association of Power Producers, told ET.

According to the coal ministry, five of the eight winners are yet to submit their documents to the coal ministry and Coal India. The CIL executive said one company was in the process of signing a fuel-supply contract. “The rest would be done as and when they supply the full set of documents necessary for initiating supplies,” he said.

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A participant of the first round of similar auction said supplies began almost a year after the auction. He said after the auction, approval for the new tariff was required from the regulator and purchaser of power. Also, additional documents were sought after the auction was completed, he said.

“Procuring these documents took additional time,” he said.

Auctions for the second round were held on the basis of a 4 paise per unit floor on discounts over contracted power tariffs in which 2.79 million tonnes of coal was booked for a total capacity of 875 MW. Average discount offered by generators at the auction was 7 paise per unit.

Also Read: Coal India’s February production likely to be 66 million tonnes

The coal ministry is offering fresh supply contracts at a floor discount of 7 paise per unit over its existing tariffs. Some 3.1 gigawatt capacity requiring an estimated 16 million tonnes are eligible for participation.

According to the coal ministry, five of the eight winners are yet to submit their documents.

ET News
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