You are here: Home » Economy & Policy » News
High WPI may put pressure on retail inflation, says RBI in annual report
Business Standard

Power Min allows gencos to charge compensatory tariff for importing coal

Power plants constructed had asked the power ministry for pass through of the cost they are incurring due to costlier imported coal cost to the consumers

Power ministry | coal import | power plants

Shreya Jai  |  New Delhi 

The direction was issued under Section 11 of the Electricity Act by the power ministry.

The Union has allowed power units to charge a compensation tariff in lieu of importing coal. This would cover both state government-owned and privately owned power generation units (gencos).

"The methodology shall be used by the generating companies supplying power under Section 63 and state governments to calculate the compensation due to blending with imported coal. The mechanism for billing and payment for these plants shall be as per PPA,” the order said.

The direction was issued under Section 11 of the Electricity Act by the .

'Business Standard' recently reported that state-owned NTPC will see its fuel cost go up to Rs 7-8 per unit by importing coal and final tariff would go up by 50-70 paisa which will be passed on to the consumers.

There are close to 32 GW of constructed under Section 63 of the Electricity Act through competitive bidding. These units, unlike NTPC, which is governed under Section 62, cannot pass on tariff without regulatory approval.

These units had asked the for pass through of the cost they are incurring due to costlier imported coal cost to the consumers.

The power ministry in its note said, "A methodology has been finalised in consultation with the Central Electricity Authority, which was discussed in the meeting on May 20, 2022, with the stakeholders. Based on the discussion, the methodology has been revised to make it in line with the existing methodology being adopted by the CERC (Central Electricity Regulatory Commission."

The Centre has also directed the power distribution companies (discoms), to ensure adequate cash flow to power plants, payment of minimum 15 per cent of the provisional weekly bill shall be made by the discoms within a week from receipt of bill from these 32 GW plants.

In case of default, the can sell 15 per cent of power tied-up with that discom in power exchange, the ministry said in its note.

Acknowledging that domestic coal stock is not enough to meet the power demand in the country, the Centre last week directed all states and power generating companies (gencos) to import coal before monsoon sets in.

The power ministry warned gencos that the coal blending benchmark would be increased to 15 per cent from the current 10 per cent if they did not import coal by the end of this month. The directive also said that if blending is not started by June 15, domestic coal allocation of the defaulting thermal plant will be reduced by 5 per cent.

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

First Published: Fri, May 27 2022. 15:24 IST