Centre offers loans to stressed power plants

NEW DELHI: The government has directed state-run Power Finance Corp. (PFC) and REC Ltd to offer short-term loans to stressed power plants using imported coal to help them restart production, as part of efforts to tackle a power crisis that has triggered widespread blackouts and threatens to hurt economic growth.

“These plants need working capital to buy coal and start generating power,” the Union power ministry said on Wednesday.

Separately, the coal ministry may regulate fuel supply to states whose discoms continue to buy cheaper electricity from domestic coal-fuelled plants despite agreeing to buy power from imported coal-fired plants. Rising global fuel prices have made electricity from plants that rely on imported coal more expensive, crimping demand from the country’s struggling power distribution companies.

Scorching temperatures across India have led to soaring electricity demand to run airconditioners even as power plants face severe coal shortages. Many states have been resorting to blackouts for several hours a day, unable to cope with rising power demand.

India reported a record peak power demand met of 207.111GW and a peak power shortage of 10.77GW on April 29. On Tuesday, the peak demand was 194.78GW, according to data from state-run Power System Operation Corp. Ltd (Posoco), which oversees the country’s critical electricity load management functions.

The power ministry’s directive to PFC and REC to assist imported financially stressed coal-fired plants comes after the government invoked Section 11 of the Electricity Act to make it compulsory for all such plants to generate power at their full capacity to avert an energy crisis. While 10 gigawatts (GW) of imported coal-fired capacity has started generation, around 7.6GW is still idle, primarily on account of high imported coal fuel prices and the financial inability to buy fuel because of pending payments from stateowned electricity distribution companies (discoms). All domestic coal-based plants have also been directed to import coal to meet at least 10% of their need.

Queries emailed to the spokespeople for PFC and REC on Monday remained unanswered.

“While electricity from imported coal-based projects is coming to discoms at over ₹7 per unit, that from plants using domestic coal is about ₹3-3.5 per unit. If states having power-purchase agreements fail to buy power from imported coal-based projects and schedule electricity largely from domestic coal projects for meeting demand, it would add further pressure on projects,” a government official said, requesting anonymity.

Indian power plants witnessed a sharp depletion of fuel stocks last September as 14 imported coal-fuelled power projects reduced output because of a spike in coal prices. As a result, electricity demand from domestic coal-fuelled power projects surged.