Government to offer short-term loans to struggling imported coal-fired power plants


The Department of Energy said on Wednesday it had ordered the Power Finance Corporation (PFC) and the Rural Electrification Corporation (REC) to provide short-term loans, for six months, to imported coal-fired power plants. (ICB) who are in difficulty and are undergoing insolvency proceedings before the National Company Law Tribunal (NCLT).

“These plants need working capital to buy coal and generate electricity to restart their operations,” the ministry said in a statement.

On May 9, Energy Minister RK Singh had held a meeting on issues related to working capital for ICB plants that are stressed or in NCLT. The decision to grant these short-term loans was taken at the meeting.

“To restart their operations, ICB plants that are under stress or in NCLT need working capital to buy coal and start generating electricity. It is ordered to take necessary steps to arrange short-term loans for a period of six months with adequate collateral, for these power plants at the earliest,” the ministry said.

Increase in power demand

In view of the increase in demand and the unprecedented pressure on the national coal supply, the ministry has already issued instructions to all ICB power stations on May 5 under section 11 of the 2003 act on electricity, to operate and produce electricity at full capacity, even for projects that are stressed or under NCLT.

In a May 5 letter to states, the ministry said electricity demand had increased by nearly 20% in terms of energy and domestic coal supply had increased but was not sufficient to meet demand. increased demand. This leads to load shedding in different areas. Due to the mismatch between daily coal consumption and receipt, power plant inventories have been shrinking at an alarming rate.

Import of coal

The international price of coal has risen in an unprecedented manner. It’s currently around $140 a tonne. As a result, the import of coal for blending has decreased, the ministry added.

The ministry has already ordered the National Coal Power Plants (DCB) to import 10% coal for blending. Additionally, to ensure that all ICB plants are operating, the Center has advised states that the higher price of coal is an aftereffect. Most states have done so, and approximately 10,000 MW of capacity is currently operational, out of a total of 17,600 megawatts (MW).

Published on

May 11, 2022


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