The Indian government is preparing to auction supply of coal to stressed power plants, which must sell the electricity produced using this fuel on the spot market. According to the bid guidelines released by the power ministry, the auctions, likely to start by February next year, will be reserved for non-captive power plants which do not have power purchase agreements for more than half their capacity. Power minister Mr RK Singh told ET that the move allowing coal supply for short-term electricity trade would help revive stressed power assets. He said “So far, coal was allocated for long-term and medium-term PPA holders. With this, stressed power stations may be revived. This would also enable deepening of the power market as the electricity would be traded through the power exchange.”
According to the guidelines issued by the ministry, the power generated through use of this coal must be sold on the power exchanges or short term market through bidding on the power ministry’s DEEP portal. Also, the net surplus proceeds generated in this manner, after meeting operating expenses, shall be entirely used for servicing debt.
However, industry officials said the upcoming coal auctions were not different from the special forward coal auctions held by Coal India for the power sector. They said the new auctions had many restrictive clauses, too.News Source: STEEL GURU