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Published:November 27, 2018 10:54 AM
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 No’s Total No. of projects 34 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. Conclusion: 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
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
No’s
Total No. of projects
34
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:
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.
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.
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).
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.
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.
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.
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.
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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