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Now, UP decides to allow generators to import coal
The ETF has given nod to the proposal seeking import of coal by state-owned as well as private thermal plants in the state, says senior official
LUCKNOW Making a U-turn on the issue, Uttar Pradesh has finally decided to allow its thermal power plants to import expensive foreign coal to partially meet the state’s fuel requirement after having avoided taking the decision that it considered as ‘unpalatable’ for months.
The crucial decision, which is believed to have deep financial implications for power consumers as well in terms of a possible power tariff hike, was taken in the Energy Task Force (ETF) meeting chaired by chief secretary Durga Shankar Mishra here on Monday, according to people aware of the development.
Additional chief secretary, energy, Avnish Kumar Awasthi, UP Power Corporation Ltd (UPPCL) chairman M Devraj, managing director Pankaj Kumar, UP Rajya Vidyut Utpadan Nigam (UPRVUNL) managing director P Guru Prasad, apart from planning department officials, were among those present in the meeting.
“The ETF has given nod to the proposal seeking import of coal by state-owned as well as private thermal plants in the state. The proposal will soon be submitted before the cabinet for approval, after which the UPRVUNL and private developers may float tenders to purchase foreign coal,” said a senior official.
In the first phase, the UPRVUNL is believed to have decided to buy 5.5 lakh MT coal worth ₹1,100 crore for two months.
Having been in dilemma for around two months, the UP government decided in the third week of May that no thermal plants in the state would import coal despite the central government exerting pressure on all states, including UP, for blending at least 10% foreign coal with the domestic one.
Buying expensive foreign coal, it was felt, would put an additional financial burden on generating companies, which might feel forced to increase electricity price to recover the increased cost.
The government decision on ‘no to foreign coal’ was applicable to both government-owned and private thermal plants in the state.
“I am directed to convey that the government has taken a considered decision that the UPRVUNL thermal plants as well as independent producers (private generating companies) will not import coal,” special secretary, energy, said in a letter to the UPRVUNL and the UPPCL on May 20.
The government’s decision came in the wake of the UPRVUNL seeking clear directions from the government on whether to buy or not the imported coal in view of the central government having issued an advisory to states asking them float tenders to import foreign coal to meet a part of their fuel requirement.
The corporation had pointed out to the government that buying costly imported coal would entail an increase in power price by Re 1 per unit or more. Earlier, the UP Electricity Regulatory Commission (UPERC) had also posed some questions to the Utpadan Nigam, asking them, among other things, whether power units were technically fit to run on foreign coal.
The UP Rajya Vidyut Upbhokta Parishad and the All-India Power Engineers’ Federation were demanding that the state government does not allow generators to import coal in the larger consumer interest. They also alleged that states were being forced to import coal to benefit some industrial houses.
The state government’s U-turn on the subject now is being seen as a consequence of the pressure being put on it for permitting generators to invite bids for import of coal.
“The Union power ministry recently threatened that the daily quota of domestic coal would be reduced to thermal plants in states that did not fall in line,” an official said, adding: “Many plants in the UP already have low coal reserves and any cut in coal supply may worsen the power situation in the state, especially during rains.”
