Centre warns against selling power at hiked rates on exchange

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Centre warns against selling power at hiked rates on exchange
Centre warns against selling power at hiked rates on exchange

12 Oct 2021: Centre warns against selling power at hiked rates on exchange

Several states across India witnessed blackouts over the weekend amid concerns over a coal shortage. Notably, coal is used to produce roughly 70% of India's power. Nearly 80% of India's coal power plants are in the critical, or "supercritical" stage, i.e., supplies may last for under five days, official data shows. Meanwhile, the Centre warned states against selling power in exchanges at higher prices.

Outage: Bihar, Delhi, Jharkhand, Maharashtra among states witnessing power cuts

Over the weekend, the states of Bihar, Jharkhand, and Rajasthan reportedly witnessed power cuts lasting as long as 14 hours. Rajasthan Additional Chief Secretary for Energy Subodh Agarwal said the state has been receiving less than half of its contracted coal from Coal India Ltd. Maharashtra had 11 gigawatts of capacity under outage. Delhi, Kerala, Punjab, Uttar Pradesh are also witnessing a coal shortage.

Implications: Prices on power exchange increase over 3 times

Due to the coal shortage, generators and some industrial users are being forced to buy electricity at the power exchange. Further, spot prices on the Indian Energy Exchange Ltd. have surged by over three times in the past two weeks, climbing to Rs. 16.42 per kilowatt hour on Monday. According to the company, this is the highest the rate has been in 12 years.

Concerns: Power plants being prioritized over other coal consumers

Amid the shortage, coal-fired power plants are being prioritized, which leaves other coal consumers—aluminum smelters, steel mills, etc.—with little supplies, forcing them to either reduce output or pay more. Several Indian coastal plants have also restricted outputs amid a surge in seaborne coal prices; further burdening domestic supply. The Delhi government raised an alarm over coal supplies projected to last just a few days.

Fact: Delhi's supply halved: Satyendar Jain

Recently, Delhi Chief Minister Arvind Kejriwal wrote to Prime Minister Narendra Modi highlighting that power stations catering to the city had reserves for one-four days, as per data available till October 5. Delhi's supply has been halved, city Power Minister Satyendar Jain said Tuesday.

Government response: Fears of disruption entirely misplaced: Centre

The Coal Ministry said Sunday, "Any fear of disruption in power supply is entirely misplaced," claiming there is "ample coal available in the country to meet the demand of power plants." On Monday, Union Home Minister Amit Shah had chaired a meeting with Power Minister RK Singh, Coal Minister Pralhad Joshi, and others. The Prime Minister's Office is likely to review the power crisis.

Solution: Situation under control, says Power Secretary

Speaking to CNBC TV18, Union Power Secretary Alok Kumar that Coal India Ltd. is required to supply about 1.6 million tons of coal a day. Kumar said it is likely to reach that output level within a week. The company said its output has risen to 1.5 million tons a day for now. Kumar assured the situation is "under control."

Warning: Centre warns against profiting on power exchanges

On Tuesday, the Power Ministry also warned states against selling power on exchanges to benefit from the surging prices. The Ministry warned that this will result in central power producers restricting the supply of electricity to such states. "The states have therefore been requested to use the unallocated power for supplying electricity to the consumers of the State," the Ministry said.

The news article, Centre warns against selling power at hiked rates on exchange appeared first on NewsBytes.

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