Industry

No penalty on imported coal-based power plants for default: Government


The government clarified on Saturday that imported coal-based power plants, which were directed to operate under an emergency legislation earlier this month, would not be penalised for default in case states do not offtake electricity and the average prices on power exchanges are inadequate. This means imported coal-fired power plants now have the option to avoid selling on power exchanges if states that buy power from them refuse to offtake the electricity.

The government invoked the emergency clause on May 5, mandating 13 imported coal-fired stations to operate and either sell to states or on power exchanges.

The average power price on the day-ahead market of the

for May 22 was ₹6.5 per unit.

The government move, which was aimed at increasing electricity supply and easing pressure off domestic coal, caused anxiety among imported coal-based power plants. They said selling on power exchanges when discovered tariffs were lower could result in losses.

The power companies, however, sought more clarity since these plants need to operate at technical minimum levels and cannot be shut down even in case of no power offtake.

“In case the average MCP (market clearing price) is less than the tariff given under Section 11 or the mutually agreed tariff with the procurer, then the generator will not be bound to sell power in the power exchange. However, if the average MCP is more than the tariff given under Section 11 or the mutually agreed tariff with the procurer, then the generator will mandatorily sell power in the power exchange,” the Union power ministry said on Saturday. According to the clarification, power distribution companies must maintain the unconditional bank guarantees against electricity supply as per their power contracts.



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