E-Paper
Bright spark for PSPCL as Centre removes ‘washed coal’ condition
With this, the PSPCL will save at least ₹400 crore per annum
Cash-strapped Punjab State Power Corporation Ltd. has got a major relief as the Union government has done away with ‘washed coal’ condition for power plants.
With this, the PSPCL will save at least ₹400 crore per annum, besides it gets a breather in a contempt petition filed by private thermal plants, seeking ₹2,800-crore coal washing charges from the corporation. It will bring down the power-generation cost in Punjab.
Till now, it was mandatory for plants to use washed coal to reduce the ash content. It was a cumbersome process and private plants were demanding washing charges from the PSPCL.
Private power plants and PSPCL were caught in a legal battle over coal washing charges. After losing the case in the Supreme Court, the PSPCL were to bear ₹1,790 crore against coal washing charges for the period between 2012 and 2019 (October), along with the future annual burden of ₹400 crore. However, private thermal plants were demanding ₹2,800 crore.
To make for the additional burden of ₹1,790 crore, the Punjab State Electricity Regulatory Commission (PSERC) in first week of January this year allowed a surcharge on power consumers, making power costlier by 35 paise per unit in the state.
The Supreme Court had directed the PSPCL to pay ₹2,800 crore to Larsen & Toubro (L&T) to compensate it for coal washing and transportation cost. L&T runs Nabha Power Limited (NPL), Rajpura, and Talwandi Sabo Power Plant under a power purchase agreement it had signed with the power corporation.
The overall impact of the judgment would have been ₹8,000 crore in next 20 years, the remaining time period of PSPCL’s power purchase agreement with L&T, which the PSPCL will now save.
When contacted, PSPCL CMD Baldev Singh Sran said the Union environment ministry’s step is welcome as it will prove most beneficial for Punjab. “Doing away with coal washing will help us save ₹400 crore per year. It will ultimately reduce power production cost and benefit consumers accordingly,” said Sran, adding “now the legal battle over coal washing charges has become infructuous. It’s a major relief for PSPCL”.
WHAT IS COAL WASHING CHARGES AND LEGAL TROUBLE FOR PSPCL
The issue pertains to washing charges and measuring calorific value of coal at the mine while loading. The PSPCL had rejected the L&T claim to get coal washing charges, saying that as per the PPA and ministry of environment norms, the L&T has to use only washed coal for power generation in Punjab. The L&T contested the PSPCL claim in the Supreme Court saying the PPA mentions using only washed coal, but the washing charges, which comes around ₹500 crore annually for both thermal plants, have to borne by the power distributor. The power regulator and appellate tribunal for electricity had passed orders in favour of the PSPCL, but the apex court overturned it.
As the PSPCL didn’t implement the earlier judgment in toto, L&T filed a contempt petition in 2019, in which apex court again reiterated that the point of measuring the calorific value of coal for power plants would be at the project site. And the cost of washing coal could be added to the tariff.
