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Imported coal worries plague Punjab State Power

30 Aug 2013

A decision by the Appellate Tribunal for Electricity (APTEL), which allowed private sector thermal plants coming up in Punjab to import coal directly, has added to the worries of the Punjab State Power Corporation Limited (PSPCL).
Due to an unstable rupee in comparison to the dollar, the decision would lead to fluctuating power tariff and the consumers will have to bear the brunt.

The order by APTEL came on August 21, by which Sterlite Power Limited undertaking 1,980 MW power plant at Talwandi Sabo and Larsen and Toubro Power Limited undertaking 1,400 MW thermal plant at Rajpura can now issue tenders to import coal for meeting their requirement. As per reports, Larsen and Toubro Power Limited has already invited bids for importing coal.

"The prices of imported coal can't remain stable, so the fluctuating coal cost had to be passed on to the consumers. When rupee is sliding down in comparison to dollar, imported coal is going to affect our financial health," pointed a senior PSPCL official. Though there are stringent norms for a transparent bidding process fixed by APTEL, the fluctuation in coal cost can't be controlled," adds the official.

To make the bidding process transparent, APTEL has asked private companies to include a senior official of the state power corporation in the panel opening the tender documents.

PSPCL chairman cum managing director KD Chaudhary said, "There would be an increase in the power tariff when imported coal would be used, but how much, only time would tell."

Sterlite and Larsen and Toubro opted for imported coal as the subsidiaries of Coal India Limited (CIL) were unable to supply the quantity of coal assured in their letter of assurance.

Both private players had challenged the earlier decision of the Punjab State Electricity Regulatory Commission (PSERC) in which it had said that imported coal would be supplied only by CIL.

With imported content, the original tariff for Sterlite and L&T at 286 paise and 289 paise respectively, as per an estimate drawn by the PSPCL, is likely to rise by about 25 to 75 paise per unit. For charging additional fuel price both companies have been directed by APTEL to file their petitions before the PSERC.

The judgment has come in wake of the decision by the Centre's the Cabinet Committee on Economic Affairs (CCEA) on June 21, 2013, whereby the fuel supply agreements (FSA) have to be signed for domestic coal quantities of 65%, 65%, 67% and 75% of the total coal requirements, during the subsequent years starting from 2012. The remaining coal requirement has to be fulfilled by imported coal.

The balance quantities to fulfil the remaining FSA obligations can be either imported by CIL or the thermal plant concerned directly.

Further, as per the CCEA decision, the higher cost of imported coal is to be considered for "passing on to the consumers". APTEL has endorsed it in its decision.

Source: Hindustan Times