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Home News Power Sector News Coal-starved captive producers push spot power price to Rs 11.41/unit

Coal-starved captive producers push spot power price to Rs 11.41/unit

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IEXSpot power price touched 5-year high of Rs 11.41 per unit at IEX on May 22, which experts attributed to aggressive bidding by captive units following government's decision to ramp up coal supplies to power plants.

The government decided last week to augment coal supplies to centre/ state power plants and independent power producers (IPPs) from May 19 to June 30 to overcome shortage of the dry fuel and check power crisis.

The decision was taken in a joint meeting of power, coal and railways ministries on May 17, 2018.

"The government is ramping up coal supplies to power plants at the cost of captive power producers. This is one of the main reasons for price touching a peak of Rs 11.41 per unit in day ahead market today at IEX," Indian Captive Power Producers Association(ICPPA) Secretary Rajiv Agarwal told .

He further said: "If somebody is running continuous process-based industry like aluminium, then he cannot wait for power supply. They are required to arrange power for their businesses."

Power sector has been witnessing coal shortage since last year, resulting in surge in spot prices to as high as Rs 10.80 per unit in September 2017. In October, the government said the issue of coal supply to power plants is being addressed in a co-coordinated manner by the ministries of power, coal and railways.

According to an expert, Rs 11.41 per unit is a five-year high rate of power at Indian Energy Exchange (IEX) which is mainly triggered by government's decision to stop supplies to captive power producers till June 30.

However, the average spot power price was Rs 6.28 per unit at IEX.

The expert said spot power price went up by Re 1 to Rs 1.25 per unit last week mainly due to outage of transmission line in north India due to storm warnings, which resulted in lower import (or availability) of power from other regions.

He further said the sudden surge in tariff at the exchange can be attributed to aggressive bidding by captive power producers in day ahead market trade.

ICPPA wrote to the Prime Minister's Office and Coal Minister Piyush Goyal yesterday, highlighting its woes.

It urged for resuming coal supplies to captive plants, which have been set up by various industries like steel, cement and aluminium to meet their own demands.

The new adhoc decision without any advance notice would bring industry to a standstill, the association wrote.

It pointed out that captive plants have signed legally binding long-term fuel supply agreements with Coal India and abrupt stoppage of supplies would bring the industry to a grinding halt and result in millions of job losses.

ICPPA also claimed that captive producers just got 12 per cent out of total rake sanctioned to them in 2017-18.

The association said the government should avoid such adhoc decisions and bring in a system of giving advance notice to the industry for making alternative arrangements.


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