New Delhi: The attempts to 'misuse' the provisions of SHAKTI policy as per their own 'convenience' by some private players in the coal sector have raised the doubts over the 'transparent objective' of the scheme as some private power generating companies have 'interpreted' the provisions of SHAKTI B (iv) as per their own convenience to tie up power purchase agreements.
As per industry sources, the coal allocation to the states of Gujarat, Uttar Pradesh and Madhya Pradesh have come under the scanner as private players get the allocation of linkage coal through state governments from their preferred subsidiary of Coal India Limited to get rid of the competition under tariff-based competitive bidding that is scheduled to happen in near future and have windfall gains.
Notably, Scheme for Harnessing and Allocating Koyala Transparently in India (SHAKTI) was notified in the Gazette in March 2019.
The allocation of coal to the states of Gujarat, UP and MP through the subsidiaries from SECL, NCL and WCL respectively out of eight subsidiaries which are BCCL, CCL, ECL, MCL, NEC, SECL, NCL and WCL has brought the procedure under the scanner.
"It shows that the power plants allocated in the Chhattisgarh, Uttar Pradesh and Maharashtra region have been favoured by making private thermal power generating companies situated in other states uncompetitive in terms of landed cost of coal –the cost of power generation for which the bidding is supposed to happen," the sources said.
The total requirement of power put forward by these states is around 8,515MW –Gujarat: 3,915 MW, MP: 3,000 MW, UP: 1,600 MW –and the linkage coal quality allocated to these states is to the tune of 35.04 MT in a year. Gujarat has got an allocation of 16.75 MT from SECL, while MP has got the allocation of 11.93 MT from WCL and UP has got the allocation of 6.36 MT from NCL.
Surprisingly, other major subsidiaries such as MCL, CCL and ECL that contributes 45 per cent of CIL's total coal production have been left out and totally ignored by CIL, while allocating linkage coal under SHAKTI B (iv) to the states.
"There are several thermal power plants located in the vicinity of ECL, MCL and CCL and excluding these subsidiaries would inevitably increase the power procurement cost to the states in a situation where discoms are facing a huge debt challenge," the sources maintained.
Moreover, the CIL has allocated linkage coal against power requirement of Madhya Pradesh from WCL that operates at the cost plus and thus the basic cost of coal is 20 per cent higher than all other CIL subsidiaries, the sources said, adding that it has set aside the effect of the incremental increase in royalties and taxes which are to the tune of 50 per cent of the material cost of coal resulting into an invariable increase in the cost of power of discoms.
Citing a case of power aggregator, the sources said, "In February, PTC India had concluded the bidding process of 2,500 MW and the entire quantum offtake happened at a very competitive rate of Rs 3.26/kWh offered by the thermal power generating companies, which has not been operationalised yet as PTC India is finding it difficult to get the offers of power requirement from the states."
"The provisions of SHAKTI B(iv) has allowed states to place 8,515 MW of power requirement, which shows a sense of malafide interest of some private power generating companies who want to get benefitted through the norms of the policy," the sources maintained.
Notably, the Supreme Court had cancelled the coal blocks in 2014 on the ground of arbitrary allocation and no set guidelines that resulted in undue benefits to the allottees.
"The allocation of the linkage coal from selected CIL subsidiaries under SHAKTI B (iv) is repetition of the same which would lead to windfall gains to certain selected corporate houses engaged in thermal power generation business," the sources said.