Out-of-turn coal to PSE utilities irks IPPs

Out-of-turn coal to PSE utilities irks IPPs

News

1. The Centre decision to supply coal out-of-turn to State and PSU utilities is being objected by independent power producers (IPPs)

Important Facts

2. ln order to avoid possible shortage of coal at state owned thermal power plants the central government has directed the Coal India to provide out-of-turn coal allotment to State and central PSU utilities.
3. This move has irked independent power producers (IPPs) which are already under stress on account of high levels of debt and less than optimum plant load factors. State-owned NTPC currently operates at a plant load factor (PLF) of more than 70%, IPPs are averaging about 55% PLF.
4. The demand for coal supply coincided summer when demand for power Increases.
5. Shortage of coal supply to IPP raised number of concerns

• Discrimination based on ownership of assets puts into question the sanctity of commercial contracts signed by Coal India Limited.
• This would lead to more stress for the bankers.
• This is against the principle of ease of doing business.

6. Association of Power Producers (APP) has demanded level playing field for both Public and Private sector.
7. APP demanded that prioritization should be on the basis of efficiency rather than on contractual obligations. This helps to produce more power on same quantity of coal.