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The proposals are being deliberated at the high-level empowered committee headed by the cabinet secretary that is likely to meet next on Friday.
New Delhi: The government plans to auction power supply contracts with attached coal supplies, ease norms to allow coal usage for short-term power contracts and put in place a payment mechanism to help power projects recover dues in time from state electricity distribution companies to alleviate the sectoral stress to a large extent.
The proposals are being deliberated at the high-level empowered committee headed by the cabinet secretary that is likely to meet next on Friday. “It has been proposed that the government removes restrictions on coal usage to include shortterm PPAs,” a person in familiar with the development said. “Auction of another 2,500 MW aggregated PPA scheme, this time with attached coal supply, has been proposed. Work has already begun on drafting a bill discounting mechanism to ensure recovery of timely payments from state power distribution companies directly to banks.”
A payment mechanism for private power companies will release Rs 15,000 crore dues owed to private power companies. The state-owned power generators have payment security mechanism with the Reserve Bank of India on its board. Private sector generators, on the other hand, face delay of up to six months in payments by discoms, adding to their stress and defaults on loan servicing.
The empowered committee will also discuss issues related to gas-based power plants on Friday. The first meeting of the committee took place on August 31.
“All these proposals, if implemented, will address the problems in the Indian power sector to a large extent,” he said.
Amendments to the tariff policy are also likely to be finalised soon to address regulatory issues, sources said. The draft amendment to National Tariff Policy 2016 provides for consumer friendly measures, including penalising the discoms for power cuts other than in force majeure conditions.
It also provides that after March 2019, the distribution companies will not be able to pass on more than 15% technical losses into electricity tariffs. The government on August 27 directed power regulator Central Electricity Regulatory Commission (CERC) to allow changes in any central or state government duty to be passed on to consumers even after award of bids, in a move to help revive some stuck power projects.
The pilot round of PPA auction was conducted by Power Finance Corp and Power Trading Corp in July for 2,500 MW contracts. Seven companies including RKM PowerGen, Jaiprakash Associates and IL&FS bid for bagging 1,900 MW three-year power supply contracts at a price of `4.24 per unit.
Telengana and Tamil Nadu are negotiating to offtake 500 MW each from the scheme, while Haryana is likely to buy 400 MW and Bihar another 200 MW, the sources said.
According to the report of the 40th Standing Committee on Energy, the total coal-based power capacity in the private sector is nearly 90,000 MW, of which 75,000 MW is operational. It is estimated that 60,000-65,000 MW of this capacity may be under financial stress. |
