Kolkata: Power companies that participated in an auction for long-term fuel supply contracts may sue Coal India for holding another round of auction and not allowing them to bid.
Coal India executives, however, said the second auction would help the stressed power plants that could not participate last time for reasons beyond their control.
Participating power companies said that the 2017 auction, Shakti B(ii), was a one-time process and was for power plants that had managed to sign power purchase agreements (PPA) but did not have steady fuel supply contract from Coal India. Bidding was on the basis of discounts on existing power tariffs offered by power producers.
Ashok Khurana, director general of the Association of Power Producers, in a letter to cabinet secretary PK Sinha, alleged changes in CIL’s stand. “Coal India’s answers to several queries reiterated that the auction will be a one-time process only. To avoid any litigation issues arising out of loss of opportunity to bidders of the first round, it would be prudent to allow them to participate in subsequent rounds of Shakti B(ii) auctions,” he said.
A senior Coal India executive said there was confusion among power companies with the interpretation of one-time process. “Several stressed power assets could not participate in the first round of auctions for reasons beyond their control, including non-availability of discom certificates due to litigated or revised PPAs and some coal blocks being mired in litigation. The government has decided to offer this set of stressed power producers a chance to secure fuel supply contracts. We are executing the Centre’s decision. They will also be subject to the same set of rules and there would be no more Shakti B(ii) auction,” he said.
Khurana said that if the offered quantum in the second round of auction was made available in the first round itself, then the maximum quantum on offer would have increased, offering the bidders additional quantity against their requirements.
“The maximum allowable quantity (in the first auction) would be restricted to 80% of maximum requirement of all eligible bidders. Therefore, given the situation of possibility of conducting second round of auctions for participants other than earlier bidders would result in a loss of opportunity to earlier bidders,” the power producers’ lobby wrote to the cabinet secretary.
“It is clear that the shortage of 20% of requirement for the bidders was built into the scheme document and the Shakti Policy as approved by the Cabinet did not restrict coal to 80% of requirement… The earlier bidders of Shakti B(ii) auction are finding it very difficult to meet their PPA obligations in view of shortfall in coal supply. They cannot even opt for e-auction of coal as they have already offered discount on the earlier tariff,” the association wrote.
“Capping supplies to 80% of requirement was necessary to make sure all long-term coal consumers in the power sector receive the same treatment. At present, all new power plants receiving coal supplies through longterm contracts receive no more than 80% of their requirement,” the CIL executive said.
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