Power Crisis: Gencos May Not Switch On Idle Units Soon Over Fuel Cost Surge

Power generating companies (gencos) that use imported coal to produce electricity, could realize it tough to change on their idle units incontinently in the wake of high fuel costs, several players have told Business Standard. Last week, the Union power ministry invoked Section 11 of the Electricity Act mandating all imported coal- based mills to induce power at full capacity. Still, some generating companies that use imported coal, argue that it’s simply unviable for them to produce power when the price of coal in the international request is high, while the per-unit price of power has been limited at Rs 12 per unit on the domestic power exchange. ” Fuel costs have been surging, with imported coal price at nearly$ 380 per tonne presently. It’s sluggishly inching towards the$ 400-per-tonne- mark, which means there’s no respite from high fuel prices any time soon. At the same time, the price of power on the exchange has been limited at Rs 12 per unit.

How fair is this,” asked the principal executive officer (CEO) of a power company that has two shops running on imported coal. The executive requested obscurity given the perceptivity of the matter. In an interview with Business Standard last week, Prashant Jain, common managing director, and CEO, of JSW Energy had argued a similar point, saying that the per-unit power price on the exchange must be request- driven. “For a vibrant sector, a many effects will have to fall in place. Non-serious players must be weeded out. Demand and supply will have to mandate the price of power and stakeholders including creators, lenders, and distributors will have to work together to insure there’s no national power crisis as we’re now seeing,”he said. Of the total installed thermal capacity of236.10 megawatts (Mw) in India, around7.5 percent ( MW) is imported coal- grounded, according to the Central Electricity Authority.

Over Mw of this capacity is shut owing to financial distress. Power producers have been arguing for a long that distributors must enter into long- term power purchase agreements with them and insure timely payment of pretenses for their units to serve easily. At the same time, some of them point to fuel liaison and debt restructuring to be accepted on an critical base fornon-operational units to get going. K Raja Gopal, director, of Reliance Power, says, “ While the power ministry is keen to diffuse the current power crisis, creators have been grappling with multiple challenges for a long. These issues will have to be resolved first if the power supply has to improve in the business.” For now, however, there seems to be no respite in sight.

For case, merchant power volumes on the exchange have fallen by 73 percent to 60 million units a day now from 225 million units a day in March, said industry sources, after the Central Electricity Regulatory Commission (CERC) revised the power price (to Rs 12 per unit) on the exchange last month. Before that, the per-unit price of power had touched Rs 18-20, following desperate buying by state electricity distribution companies (discoms) to meet demand.  The intervention, coming after 13 times, had been done in consumer interest, the power ministry had said, to check raw power prices given rising power demand. Electricity demand hit a record207.1 gigawatts (Gw) in April, with the power ministry estimating that it could touch 215-220 Gw in May-June owing to the peak summer period and a pick-up in artificial exertion. At least 16 of India’s 29 countries are floundering with knockouts, though the situation has eased in some places similar as Maharashtra.

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