Imported coal to increase energy tariffs and disrupt the cash gap: Icra - Times of India

Imported coal to increase energy tariffs and disrupt the cash gap: Icra – Times of India

NEW DELHI: The Energy Ministry’s directive on blending 10% of domestic coal with imported fuel for power generation to meet rising demand is expected to raise the tariff by 4.5% and widen the cash gap in disruptions (distribution firms) to 68 pounds per unit of the Icra rating agency said in a statement. Tuesday’s note A previous estimate of 50 pesos.
The agency’s estimate coincides with government data showing a 29% jump in production by Coal India Ltd, which accounts for 80% of the fuel supplied to power plants, and coal power generation up 9% in April compared to the same period last year today. . The back of an 18% increase in fuel transmission.
But the ICRA memo said the ministry’s directive for states to import coal for blending and import coal-based power plants to operate at full capacity would increase India’s dependence on imported coal to about 13% in 2022-23 from 4% in the previous fiscal year. .
It added that increasing the proportion of imported coal in the fuel used for generation would raise the cost of supply by about 5%.
The agency’s estimates appear to be guided by two factors. The first is the high cost of imported coal, hovering around $110 per ton for the fuel with a GCV (gross calorific value) of 4,200 kcal/kg. Second, doubts about whether the higher cost of power will be passed entirely to avoid public backlash.
“With the sharp increase in international coal price levels in the past 14 months, the variable cost of generation for imported coal-based power projects is estimated to have increased by more than Rs. 3 per unit between March 2021 and May 2022,” the note said.
The note maintained a negative outlook for the government’s troubles due to its continued weak fiscal position as a result of insufficient tariffs, high losses and insufficient reliance on subsidies. But it said the credit profiles of the special disruptions are underpinned by the operational strengths arising from the demographic profile, operational efficiencies, adequacy of tariffs, as well as the strength of the sponsor, respectively.
Icra’s senior vice president, Jereshkumar Kadam, said that all India’s energy demand in April and May (so far) grew by 11.5% and 17.6% year-on-year, respectively, while the tight domestic coal supply situation and global coal price levels continued high in height. Affect power generation levels.
In December, the ministry asked countries and private generators to import coal for blending, as demand began to rise sharply and fuel stocks ran out at power stations.
Last week, the ministry invoked an emergency provision in the Electricity Act to require imported coal-based plants to operate at full capacity and sell power at power exchanges if countries with long-term power purchase agreements (PPAs) do not. buy force.
Since these PPAs do not contain a pass clause for any increase in the cost of fuel, the ministry has asked a committee to set a tariff for the time being, taking into account prevailing coal prices. The directive for imported coal-based plants is in effect until October 31.
These measures began with reports of widespread power outages in the states amid low fuel stocks at power plants due to insufficient renovations, mainly due to logistical issues. But even though coal dispatch rose to 400 pistons per day, against a standard requirement of 24 days, the average fuel stock at power plants was 8 days on May 7 versus 9 on November 30, an improvement over 4 days. . On September 30, 2021.

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