Coal India told to raise supply to power firms, cut e-auction

The government has asked Coal India to increase its supply to power companies as also to reduce its e-auction for additional supplies, Coal and Power Minister Piyush Goyal said Friday.

"We are requesting Coal India to reduce e-auction of coal to enable additional supplies to the power sector. We hope the Coal India board will take that decision soon so that we can have additional power flowing to the consumers," Goyal told media persons after a meeting here with power producers, ahead of the union budget next month.

Heads of leading energy companies that met the power minister included Anil Ambani, chief of Reliance Power, Gautam Adani of Adani Power, Tulsi Tanti of Suzlon, Naveen Jindal of JSPL, and Arup Roy Chowdhury of NTPC.

Goyal also said a task force has been formed to look into rationalising coal linkages.

"A task force has been set up within the ministry, which is going to study coal linkages in the country. It will work to rationalise coal linkages to bring about an ease in the railway network," he said.

"This will also save significant amount of freight cost if we can try and rationalise linkages," he added.

The government is looking at mining additional coal to solve the supply problems of the power sector, the minister said.

"We have taken certain decisions in terms of requesting the environment ministry to allow additional mining out of the coal mines which are already operational. I will be meeting the honourable environment minister soon to take forward the dialogue," Goyal said.

The minister discussed a range of power sector issues, ranging from generation, fuel supply problems to ease of doing business.

In the wake of gas shortage, the Association of Power Producers (APP) suggested resolving the issue of compensatory tariff through collaborative effort.

The APP felt raising gas price to $8.4 per mmBtu would make power tariffs unsustainable and drive away potential investors in the sector.

Goyal also said he will meet bankers Monday to discuss ways to resolve the conflicts between the power sector borrowers and the banking sector.

"We want to find a way forward to resolve their problems as well as of this sector many of which have been caused due to factors beyond the control of the investors or the companies who are in this sector or the state governments," Goyal said.

According to a Moody's report, of all impaired loans at public-sector banks, 20 percent are of distribution companies (discoms), with the proportion going up to 48 percent at some of the most exposed banks.