Govt may direct imported coal-based plants to boost summer power supply

New Delhi: The government may direct some imported coal-based power plants to run at full capacity this summer to meet an anticipated rise in peak power demand by invoking special provisions of the Electricity Act 2003, said people aware of the development.

There are 15 imported coal-based power plants totalling 17 GW capacity, but the government directive may be applicable only on some. This could include Tata Power's 4,000 MW Mundra plant, two people said.

The directive will be issued under Section 11 of the Electricity Act, which provides that the Centre may, under extraordinary circumstances, ask a power generation company to operate and maintain any station in accordance with its directions.


These plants play a key role in meeting peak power demand, projected at 271 GW this year, higher than last year's summer peak of 243 GW.

The power ministry and Tata Power didn't respond to email queries. Cost of imported coal-based power plants is usually higher than those running on domestic fuel. The government directive allows plants to recover higher costs arising from any increase in international coal prices by allowing them to raise tariffs beyond the rates specified in the power purchase agreements.

The power ministry has invoked the Section in the last few years in phases on soaring cooling demand. However, peak power demand last summer didn't reach the projected 270 GW due to favourable weather conditions and early monsoons, resulting in lower-than-expected consumption.

Since imported coal-based capacities are needed to meet peak power demand, the Centre has been working on a solution for reducing costs of operating such plants.

The ministries of power and coal have been deliberating on ways to include domestic coal as part of the fuel, which is currently not possible because of plant design and sufficient availability of higher-grade coal in the country.