Govt orders out-of-turn coal for state-run power firms, pvt ones to be hit

New Delhi, May 25: In a jolt to private power producers, the government has ordered Coal India Ltd to make ‘out-of-turn’ allotment of scarce coal to central and state electricity generation companies.
The order follows a Coal Ministry directive earlier this month that instructed companies like Mahanadi Coalfields Ltd to deploy rakes of coal only for power plants and not other users like captive power plants of private industries.
In a May 24 letter to Coal India, the Coal Ministry said there may be an increased demand for coal due to a surge in demand during peak summer.
Power generation in April, it said, “has been more than the programmed generation and this, in turn, may lead to a more than anticipated increase in demand of coal from the power sector.”
“In order to avoid possible shortage of coal at thermal power plants it has been decided that wherever it is operationally feasible based on various factors like coal stock availability, where suitable transport arrangements are in place etc, out of turn coal allotment may be made to state and central PSU (electricity) generation companies (Gencos) to meet the surged coal requirement for power generation,” the ministry said in the letter.
Industry sources said a coal shortage looms in India as demand for electricity is expected to hit record peaks during summer months. Also, Coal India Ltd has lagged in meeting surge in demand.
Out of turn allocation would have a direct bearing on coal allocation under the ambitious scheme named SHAKTI or the Scheme to Harness and Allocate Koyla (Coal) Transparently in India, as well as that done through e-auction. Under the SHAKTI scheme, fuel was to be allocated to power plants holding letters of assurance (LoAs).
Sources said coal allocation under these is under threat as Coal India has been failing to meet its production target and would not supply the scarce fuel to PSUs on priority.