Govt orders all imported coal plants to operate amid high power demand

The Centre has stepped in to tackle the power crisis by invoking Section 11 of the Electricity Act mandating all imported coal-based projects to generate power at full capacity, sources said.

Section 11 of the Electricity Act provides that the government, in extraordinary circumstances, may ask a generating company to operate and maintain any station in accordance with its directions. The order, issued late on Thursday, comes amid projections of high peak demand of 220 GW in the ensuing summer months.

The directive will bring on stream at least 7 GW power plants of Essar Power, Coastal Energen in states such as Gujarat, Andhra Pradesh and Tamil Nadu and it will also apply to the plants under the National Company Law Tribunal.


Of the 17,600-MW imported coal plants in the country, only 10,000 MW are operating due to the lack of compensation for the high imported coal prices of $140 per tonne, sources said.

The plants will supply power in the first instance to power purchase agreement holders. Any surplus electricity will be sold in the power exchanges.

'States can Buy Power from Exchanges'
"With this order, any state including Gujarat and Rajasthan can buy power from exchanges while the commercial issues can be resolved later. This will help in increasing electricity availability in the country," a senior government official said.

It will also help in kick-starting the non-operational units of Tata Power and Adani Power's imported coal plants in Mundra, Gujarat. These units were not operating due to commercial issues.

In the case of power purchase agreements (PPAs) with multiple distribution companies, if one discom does not use the power, it will be offered to other PPA holders and surplus can be sold to exchange.

The tariffs of the projects operating on high-cost imported coal will be worked out by a committee constituted by the ministry of power, the Central Electricity Authority and the Central Electricity Regulatory Commission.

The PPA holders can work out a mutual tariff or pay to the generation companies according to the price worked out by the committee. Discoms will have to make these payments to the plants at these rates on a weekly basis.

If discoms and the generating companies do not reach a consensus, the power will be sold in exchanges. The net profit from the sale in an exchange has to be shared equally by generators and discoms on a monthly basis. The directive will remain in effect up to October 31.

In the case of generating companies owning mines abroad such as Tata Power and Adani Power, the mining profits will be set off to the extent of the shareholding of the companies in the coal mines.