The summer has brought in its share of peak power demand across the country and heightened an already existing coal shortage. The coal ministry have already asked coal behemoth, Coal India Limited (CIL), to release its excess coal stock to PSU power plants, on preferential basis, to partly tide over the summer crisis.
The Standing Linkage Committee (SLC) decides the fate of coal linkages prioritised by the Coal India Limited. The main benefactor of this government decision seems to be the Central government's NTPC, apart from some state-owned PSUs and critical and ultra critical power plants.
Documents (minutes of SLC meeting held on May 15-16) accessed by THE WEEK indicated that coal minister Piyush Goyal had recently approved the decision of the SLC.
The ministry has also communicated the decision to the newly appointed chairman and managing director of Coal India Limited, Anil Kumar Jha, after the approval from coal minister Piyush Goyal, on May 18.
The government's decision has now irked private power producers, who are also facing the same problem of a coal crisis.
The Association of Power Producers (APP), the apex industry body of private power producers, have alleged 'discrimination' against them if this preferential treatment to PSU power units is adopted.
Coal India Limited has signed supply agreements and is committed to supply coal to a majority of the private thermal power plants in the country.
The coal behemoth which mines and imports coal had been facing a shortfall in mining output and have led to prices of imported coal skyrocket since March, coal ministry officials said.
As a result, Coal India has also defaulted on its supply commitments to most power plants in the country from March this year, prioritising its supply only for critical power units.
In a communication to Piyush Goyal, coal minister and top ministry bureaucrats including coal secretary, Ajay Kumar Bhalla, private power producers have pleaded: "This would lead to more stress for the banks. This is also against Hon'ble Prime Minister's stated policy of level playing field and ease of doing business."
In his response, Bhalla has argued that the government should prioritise coal supply to power plants on the basis of efficiency of power plants. "The allocation of excess quantity has to be on the principle of efficiency," Bhalla had argued in his letter.
But this criteria, if allowed would prefer newer and more efficient private power plants, vis-a-vis ageing plants of most PSUs.
Speaking to THE WEEK, Ashok Khurana, director general of APP, said that power producers would not 'think twice' if they have to file a litigation against CIL and government for not honouring supply commitments. "This discrimination based on ownership of assets puts into question the sanctity of commercial contracts signed by CIL," Khurana said.
"If no resolution comes ahead, we would not think twice to go for litigation. But we want to give due time to the government to reverse and reconsider its decision," said Khurana.
Piyush Goyal, coal and railways minister had recently held coordination meetings of railway, coal and power ministry officials. In these meetings, Goyal has sought plants and coal supply chains to increase their Plant Load Factor (PLF) to tide over the peak power crisis in summer.
But with most thermal power plants in the country running at half its PLF, coal minister Goyal could only hope that either price of coal falls in global markets or its supply improves from some foreign sources.