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Published:Tuesday, November 27, 2018 10:54 AM


issues in thermal power

Mismatch in demand and supply has primarily led to stress in the power sector. Several factors resulted in inability of these coal based power plants to service their debts such as shortage of coal supply because of 204 coal mines fuel supply agreement (FSA) cancellation, slow growth in power demand, delay payment by Distribution companies (DISCOMS),slow implementation of project, delay in land acquisition, inadequate transmission system, statutory clearances etc. have led to cost and time over-run in the projects which have affected the project viability.

The details of stressed power projects are given below:

Projects issues


Total No. of projects


Total stressed capacity

40,130 MW

Commissioned capacity

24,405 MW

Under construction capacity

15,725 MW

Power Purchase agreement(PPAs) tied up

18,516 MW

Power Purchase agreementPPAs not tied

21,614 MW

Linkages available

29,190 MW

Linkage required

10,940 MW

Resolved project's (08 nos.) capacity

8,820 MW

Now, the government has introduced some steps to overcome from these issues such as:

Fuel linkages under SHAKTI

The government has approved a new coal linkage allocation policy on May 2017, named SHAKTI.Independent power producer (IPPs) having PPA but no coal linkages have participated in the auction and linkages have been granted to 11549 MW capacity (10 projects) including five stressed projects of total 8490 MW capacity, and these projects have been resolved.Coal Indialimited (CIL) may grant future coal linkages on auction basis for power producers/IPPs without PPAs that are either commissioned or to be commissioned. All such power producers/IPPs may participate in this auction and bid for premium above the noticed price of the coalcompany PPA under clause B (iii) of SHAKTI scheme.

Pilot scheme for procurement of 2500 MW power

The Ministry of Power (MoP) has noticed a scheme for procurement of 2500 MW on competitive basis for a period of 3 years from the generators with commissioned projects having untied capacity.

Rationalization of Coal Escalation Index

Some generators were facing under-recoveries due to anomalies in the coal escalation index.CERC amended the guidelines for determination of tariff by bidding process of power procurement by distribution licensee to remove those anomalies and adopt a new series of Wholesale Price Index (WPI) in non-coking coal (G7-G14).

Additional cost implication to meet the new environment norms

Central electricity regulatory commission(CERC) stating that the additional cost implications due to installation or up-gradation of various emission control systems and its operational cost to meet new environment norms, after award of a bid or signing of a PPA, as the case may be, shall be considered for being made pass through in tariff.

Allowing pass-through of any change in domestic duties, levies, cess, and taxes imposed by the government

Tariff policy 2016 provided that any change in domestic duties, levies, cess & taxes imposed by Central/ State/ UTs etc. after award of bids, leading to corresponding changes in cost, may be treated as a change in law and allowed as pass through subject to PPA provisions and approval of appropriate Commission. CERC for time bound determination of per unit impact of such change in law in 30 days of filing of petition. MoP directives also provide that the impact of such change in law shall be effective from the date of change in law, and that CERC order in one case shall be applicable in all similar cases.

DISCOM Payment Monitoring App PRAAPTI

The portal will help DISCOMs and generating companies(GENCOS) to reconcile their outstanding payments and would eventually be expanded to include transmission licensees and generators of RE as well.

DISCOM Reforms

The improvement of financial health will ease out the situation of payment to the generators and increase the purchasing power of the DISCOM to buy more power.

Steps taken to reduce the cost of generation:

The introduction of third party sampling by Central Institute of Mining and Fuel Research(CIMFR) which helped to improve the quality of coal supplied by CIL.The coal linkages have been rationalized to optimize the cost of transportation of coal.

Other measures

MoP has requested to DISCOMS of respective states to clear the dues of the power producers (including IPPs) as per the time schedule provided in the PPAs.


MoP (Ministry Of Power) has constituted the high level committee for addressing the issues and the committee had recommended solutions like coal linkage should be allotted for short term PPAs too under DEEP portal, payment of the generator should be secured because payment will be routed through third party which will bear the risk; increase in quantity of coal for special forward e-auction for power sector; old and high heat rate plants not complying with new environment norm may be considered for retirement in a phased and time-bound manner at the same time avoiding any demand/supply mismatch;PPAs, FSA and LTOA for transmission of power, EC/FC clearances, and all other approvals including water, be kept alive and not cancelled by the respective agencies even if the project is referred to NCLT(National Company Law Tribunal) or is acquired by any other entity. However, through proper implementation of the steps which are recognized by the high level committee will improve the scenario of stress power plants in coming years

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