Power shortage: Almost 18,000 MW of capacity is looking forbuyers

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While Indians in many parts
of the country sit idle due to long power cuts, ironically, power
projects that could have lit up around two crore households, are
idle too. Power producers say that consumers have to put up with
power cuts, which may last from two hours to as long as six hours
in some parts of the country, due to this “artificially” created
shortage of power.

Picture2
“Most states are load shedding because the price realised from sale
of electricity is less than the cost for procuring it. They make
losses due to a lot of issues like non-recovery of receivables,
pilferage, etc. Instead of fixing these problems, discoms prefer to
go for load shedding and avoid buying power. This has created an
artificial lack of demand for power. Many projects are ready for
commissioning, but are unable to find discoms to sell power,” said
Lajpat Shrivastav, CEO, thermal, Moser Baer Projects. Almost 18,000
MW of capacity, either completely ready or close to completion, is
looking for buyers, but the state-run power distribution companies
(discoms) would rather undertake load shedding than buy more power.
Loss- making discoms have been shying away from signing pacts with
power producers for long-term supply of power because they do not
want to bear the additional cost. “Only three discoms have invited
bids to buy power in the past two years. But even they haven’t
signed power purchase agreements even though the power the
available,” Ashok Khurana, director general of Association of Power
Producers, told ET. “Power producers are ready to generate power,
but since they are unable to sign long-term pacts with discoms,
they are not allowed to draw coal. Power cuts are hurting consumers
and industry. If this is not corrected, a total of Rs 72,000 crore
of loan to power sector may turn into non-performing asset,”
Khurana said. Picture1 A senior executive from a power
discom said that the most discoms are in the process of debt
restructuring and therefore want to keep costs under check. Price
of long-term power on new contracts has increased by 50% in the
past two years to around Rs 5 for every unit due to increase in
fuel prices. In the past two years, only Rajasthan, Uttar Pradesh
and Tamil Nadu have invited bids for buying power. According to the
fuel supply agreements ( FSA), Coal India starts supplying the
contracted coal to developers only when the power purchase
agreements are in place. Therefore, in the absence of these
agreements, projects are stranded without fuel. “In the past three
years, power developers offered to sell 36,000 MW during the bids
invited by discoms, but agreements have been signed only for 4,000
MW. We are bleeding by the minute because we cannot run our
projects,” a senior executive with a power developer said. Source:
The Economic Times

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