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ALL INDIA INSTALLED CAPACITY

ALL INDIA INSTALLED CAPACITY

Thursday, August 11, 2011

Pranab Mukherjee on India's Power Sector-II: In view e-auction chaos, suggests CIL sign FSA for 20 years at 90% trigger value

On the issue of fuel availability, the Finance Minister sided with the power utilities on the issue of the developers getting coal from the alternative sources of import and e-auction and thereby having to endure unsustainable costs. In view of this, It was recommended that CIL sign an FSA with the power plants commissioned after April 1, 2009 for 20 years with 90% trigger value.
  • It was opined that since most of the PPAs of the developers linked to CIL provide for escalation of fuel charges based on the wholesale price index of domestic coal or the price notified by CIL, the above mentioned additional costs to are therefore have to be borne by the developers in the absence of coal supply from CIL.
  • The failure in coal supply from CIL, the Minister noted, therefore has the consequences of the developers being likely to default in supply of power as per PPAs, and not being able to recover full capacity charge as the availability will be much below 85%.
  • It was also felt that developers were likely to default in payments by to the Banks / FIs on account of non-recovery of capacity charge and ROE due to poor availability of plant. Further, on account of uncertainty arising out of non-signing of FSA by CIL for the ACQ. with a trigger value of 90% for the plants commissioned after 1st April, 2009 and also for those which are under construction, banks are insisting for signing of FSA before disbursai of even sanctioned loan.

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