Power Bill Likely to Jump by 14p ; Central Electricity Authority asks Coal India to raise domestic coal prices, supply imported fuel to coastal power plants

The Central Electricity Authority has asked Coal India to raise domestic coal prices and supply imported fuel to coastal power plants, a move that would raise power tariffs by 10-14 paise per unit but would make power stations viable and prevent defaults on loans of . 4.6 lakh crore, a senior government official said.

 

Power tariffs vary widely from about . 1.50 per unit for old plants to about . 7 for new units. CEA’s proposal, which seeks to minimise transportation of coal over long distances by railway wagons, will need approval of the coal ministry and the cabinet. The proposal of pooling imported and domestic coal prices by CIL will help it sign fuel supply agreements with power plants as directed by the PMO after heads of power companies met Manmohan Singh last January.

 

As per the arrangement worked by CEA, CIL should supply domestic coal at 80% of the required level to projects closer to mines to avoid transportation through rail network.

 

Power projects at coastal locations should get 65% of domestic coal and 10% imported coal. Projects neither close to ports nor mines should receive 80% domestic coal supply and about 7% imported coal, the official said. CIL is likely to import about 15 million tonnes this fiscal and 20 million tonnes next financial year. “Optimising rail network and avoiding transportation of imported coal to projects near coal mines is expected to result in saving power plants from additional cost of . 1,015 crore this fiscal and . 1,250 crore next fiscal,” he said.

 

As per government estimates, public sector banks have an exposure of about . 3.48 lakh crore to power generation projects, while sectoral lenders Power Finance Corp and Rural Electrification Corp have lent another . 1.15 lakh crore to thermal power plants.

 

The developers had expressed concerns that under-utilisation of projects would affect them financially, leading to a cascading effect on financial institutions. The PMO had directed CIL to ensure fuel supplies for 20 years to power plants that have long and medium-term sale arrangements with states and trading companies. CIL was asked to import coal to meet the demand-supply gap.

 

Source: Economic Times