Coal India has abandoned its move to cut supplies to inefficient power plants following resistance from customers. It had planned to cut the yearly quota by 80 million tonnes.
A government panel had suggested introduction of an upper limit of coal supply for each megawatt of installed capacity, which reduces supply to old, inefficient plants on the basis of a formula it suggested. â€œWe were first asked to revise the annual contracted quantities for each plant based on the recommendations by the panel,â€ a Coal India executive said.
â€œHowever, following calculation for revised quantities, a number of plants were to receive less coal, which was not taken lightly by the power companies and we were later asked by the power ministry to abandon the initiative.â€
On the basis of recommended efficiency parameter, the quota would fall to 131 million tonnes a year from 163 million tonnes. Damodar Valley Corporation was to receive 5 million tonnes less than its yearly quota of 26 million tonnes, while Mahagenco was to receive 13 million tonnes less than its yearly quota.
Coal India was to supply 560 million tonnes to these power companies going by their consumption norms. According to the new calculation, they were to receive 477 million tonnes, almost 83 million tonnes less.
A senior power company executive said the move would have reduced supply in the sector that is growing at 6% per annum. It would have reduced capacity utilisation, which is already down to around 60%, and increased losses apart from disrupting electricity supply.
Referred from economic times