Ten Power Companies Participate On Day-1 Of Power Contract Auctions

Ten Power Companies Participate On Day-1 Of Power Contract Auctions

Ten power companies with a total generation capacity of around 9,000 mw have participated on Day-1 of Shakti – the auctions for offering long term contract to power companies. They made their initial offers of discount on existing tariff on day-1 of the auctions.

These are plants that have power purchase agreements with power distribution companies but do not have steady supply of coal. They are estimated to require close to 35 million tonnes of coal in a year.

On Monday, power companies were offered coal in different quantities from different sources and they placed their initial bids in the form of discounts over their existing power tariffs.

Shakti or the Scheme to Harness and Allocate Koyla (Coal) Transparently in India, is the method of auctioning long-term coal contract to power companies. Shakti was passed by the Cabinet in June this year and would be held for the first time this week.

On Tuesday, these bidders would be given a chance to revise their offer based on offers made by other bidders. On day-3, they would be announcing their levelised discounts on the basis of offers made on day-1 and day-2.

In July, Coal India asked five of its coal producing subsidiaries out of seven, to make sure a total of 40 million tonnes of coal is separately kept aside so that it can be offered for auction to independent power producers under Shakti.

More than 50% of this quantity at 12 million tonnes each are to be supplied from South Eastern Coalfields and Central Coalfields. While the rest would be supplied by Northern Coalfields at 4 million tonnes, Mahanadi Coalfields at 9 million tonnes and Western Coalfields at 3 million tonnes.

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These five companies have decided to offer coal from a total 31 coal mines the quality for which would vary between G10 and G13. According to gradation of coal sold by Coal India, higher the grade number lower is the energy content in coal.

The one that offers the highest discount for a particular category of coal can enter into a 25-year coal supply contract with the miner. The second highest discount will have the preference of opting for the second best quality of coal on offer and so on. Read more

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