India orders all imported coal plants to operate at full capacity as emergency circumstances push power demand

"The demand for power has gone up by almost 20% in energy terms. The supply of domestic coal has increased but the increase in the supply is not sufficient to meet the increased demand for power. This is leading to load shedding in different areas. Because of the mismatch between the daily consumption of coal for power generation and the daily receipt of coal at the power plant, the stocks of coal at the power plant has been declining at a worrisome rate," the Power Ministry explained.

The plants are have been told to first supply power to power purchase agreement (PPA) holders and sell surplus to power exchanges. If generators/group cos own coal mines abroad, mining profit is to be set off to extent of shareholding, the statement said.

PPA holders shall pay generating co on weekly basis, either at benchmark rate or mutually negotiated rate, it added. If discoms/states are unable to buy power, either way, it will be sold in power exchanges.

Harry Dhaul, DG, Independent Power Producers Association of India (IPPAI) welcomed the government’s order. “It's a good step, much needed to marshal all resources of power generating cos to tackle the present crisis,” he told CNBC-TV18.

As per Section 11 of the Electricity Act, in the event of extraordinary circumstances, the government can ask generating companies to operate and maintain their generating stations in accordance with its directions.

For the purposes of this section, the expression “extraordinary circumstances” means circumstances arising out of threat to security of the State, public order or a natural calamity or such other circumstances arising in the public interest. As per the section, an appropriate commission may offset the adverse financial impact of such directions.