The Power Ministry will specify the methodology for increasing coal supply to coastal power plants who signed their power purchase agreements (PPAs) under Section 63 of the Electricity Act.
The issue relates to increasing the annual contracted quantity (ACQ) of coal supplied to thermal power plants (TPPs) on India’s coast who have inked their PPAs under Section 63, which deals with determining the tariffs through a transparent bidding system.
In 2021, the government increased the ACQ of this category of coastal TPPs by up to 100 per cent of their normative requirement from the earlier fixed 70 per cent (fixed in 2008) due to increasing domestic availability of the crucial commodity.
However, the issue is stuck as the Power Ministry has to work out a methodology to ensure that benefits accrued to the power plants as a result of the increase in ACQ are passed on to the consumers.
Committee’s deliberations
Last month, the Coal Ministry’s Standing Linkage Committee (Long-Term) for power sector, met to discuss this issue.
SLC (LT) deliberations stated that the decision in case of Section 63 PPAs of the coastal power plants has not been implemented by Coal India (CIL) for want of a methodology from the Power Ministry.
Ministry’s recommendations
The representatives of the Power Ministry stated that the Ministry in May 2023 recommended a methodology for the Section 63 PPAs of Sembcorp Energy India (SEIL).
However, this was countered by the representatives of the Central Electricity Authority (CEA), who said that this is “actually not a methodology” and are the “comments of the CEA” in the matter of the PPAs of SEIL and therefore, the methodology recommended by the Power Ministry needs to be examined further.
It was discussed that since the Power Ministry is the authority for passing on the benefits in the case of PPAs, the matter should be examined by the ministry and a methodology should be issued.
“In view of the discussions held, SLC (LT) recommended that Ministry of Power may take a final view on the methodology recommended by it for the case of coastal power plants having existing long term PPAs under Section 63 of the Electricity Act, so as to ensure that the benefits accrued to the power plants as a result of increase in ACQ is passed on to the consumers,” the committee said.
