Coal supply issue drags, brace for power cuts | business | Hindustan Times
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Coal supply issue drags, brace for power cuts

business Updated: Apr 07, 2012 00:19 IST
Anupama Airy
Anupama Airy
Hindustan Times
Coal India

Power consumers, brace for a hot summer. Notwithstanding Tuesday’s Presidential directive to Coal India to ensure coal supply to power producers, short-term relief is unlikely for domestic and industrial consumers of power, reeling under shortages that are expected to spiral as temperatures soar.

"The directive to CIL to sign FSAs (fuel supply agreements) is a welcome move but this will have no immediate impact on India’s power generation capacity," said a leading private power producer, who was part of the delegation led by Anil Ambani and Ratan Tata that asked the Prime Minister in January to mitigate fuel shortages for consistent power production.

Most existing power projects, private or NTPC, are facing coal and gas shortages. “Producers can import fuel, but states have no funds and electricity boards are not ready to pay for expensive power.” Imported coal is four times costlier than the domestic variety.

“End consumers have no option but to face cuts. Those who can afford it go in for diesel generators,” he added.

If CIL does sign FSAs with private and state-owned power producers, it will assure power producers of at least 80% of the committed coal delivery for 20 years. But power companies say that this will do little to mitigate coal shortages in the near term.

“Power shortages will continue till you address the fuel supply issues the correct way,” said a leading private developer.

“India would have no dearth of power as there are adequate number of projects being set up in this country but most of them are languishing for want of coal and gas. Give them the fuel and you will see these power shortages disappear,” he said.

Private power producers, who have invested huge funds to set up projects based on fuel supply assurances, are fuming even as their plants are lying idle for want of fuel.

Even India’s largest public sector power company, NTPC, is facing massive fuel shortages of both diesel and coal.