Lok Sabha Question No. 1406 (UNSTARRED), answered on 2018-07-26
Subject: Review on Stressed Power Projects
Ministry: POWER
Asked by: KONAKALLA NARAYANA RAO

## GOVERNMENT OF INDIA MINISTRY OF POWER

## LOK SABHA UNSTARRED QUESTION NO.1406 TO BE ANSWERED ON 26.07.2018

## REVIEW ON STRESSED POWER PROJECTS

1406. SHRI KONAKALLA NARAYANA RAO:

Will the Minister of POWER be pleased to state:

- (a) whether the Government has taken a decision to meet the power project companies  to  take  stock  of  the  situation  of  stressed  power  projects  in  the country;
- (b) if so, the details thereof;
- (c) the  details  of  the  difficulties  and  views  exchanged  by  stressed  power project  companies  and  the  Government  in  case  the  meeting  has  already  taken place between the two sides; and
- (d) the  remedial  measures  being  taken  by  the  Government  and  sops  being given to safeguard the stressed power projects in the country?

## A N S W E R

THE MINISTER OF STATE (INDEPENDENT CHARGE) FOR POWER AND NEW & RENEWABLE ENERGY

( SHRI  R. K. SINGH )

(a) & (b) : Government has been meeting with the Power Producing Companies on  a  regular  basis  to  sort  out  the  issues  affecting  the  power  sector.  The  last meeting  in  this  regard  was  held  in  the  Department  of  Financial  Services  on 21.06.2018.

(c) : During the interaction with the stakeholders, following were stated to be the major reasons for stress in power sector:

- 1) Non-availability of fuel/Coal/Gas
- 2) Lack of Power Purchase Agreement (PPA) due to Inadequate Demand
- 3) Delayed payments by Discoms
- 4) Inability of the Promoters to infuse the equity and service debt
- 5) Aggressive tariffs quoted by bidders in PPAs leading to under recovery
- 6) Regulatory and contractual disputes
- 7) Other  financial  issues  like  non-compliance  of  Joint  Lender  Forum  (JLF) decisions, Reserve Bank of India restrictions on funding of cost overrun, etc.

............2.

(d) : Following  remedial  measures  have  been  taken  by  the  Government for reducing stress in power sector:-

I.       Fuel  linkages  under  SHAKTI:- Govt.  on  17.05.17  approved  SHAKTI  (Scheme for  Harnessing  &  Allocating  Koyala  (coal)  Transparently  in  India).  Under  the scheme, coal linkages have been granted to Central & State Gencos at a notified price  under  B(i)  provision  of  SHAKTI  policy.  Under  B(ii)  of  Shakti,  linkages  to Independent  Power  Producers  (IPPs)  with  PPAs  based  on  domestic  coal  have been granted after bidding discount on tariff.

II. Pilot  project  for  procurement of 2500 MW power:- In order to address the problem of lack of Power Purchase Agreements (PPAs) in the country, Government notified the Guidelines and Standard Bidding documents (SBDs) for Procurement of Aggregate Power of 2500 MW on competitive basis under medium term  for  3  (three)  years  from  Generators  with  commissioned  projects  having untied capacity. Under the scheme, PFC Consulting Ltd. invited bids for 2500 MW of  power  wherein  PTC  India  Limited  will  act  as  Aggregator  of  demand  for purchase of power from the power projects and sell that power to State Utilities. Under the above scheme, all the coal based power projects in the country with untied capacity were eligible to participate.

Bids have been received from 7 projects for aggregate Power of 1900 MW.

Revenue earned from sale of power by the projects shall be used to service the debts owed by such projects.

III. Under  recovery  due  to  anomalies  in  Coal  Escalation  Index:-  Central Electricity  Regulatory  Commission  vide  Notification  dated  June  1 st ,  2018  has amended  'Guidelines  for  determination  of  tariff  by  bidding  process  of  power procurement  by  distribution  licensee" to  remove  anomalies  in  cost  escalation index  published  by  Department  of  Industrial  Policy  and  Promotion  (DIPP)  and adopt  a  new  series  of  Wholesale  Price  Index  (WPI)  in  non-coking  coal  (G7-G14) w.e.f.  April  2012.   On  the  basis  of  the  new  Notification  of  Central  Electricity Regulatory Commission (CERC), the generators  will be eligible  for  revised  tariff w.e.f. 1 st  April, 2017 calculated on the basis of new series of WPI for non-coking coal (G7 - G14).  This will largely take care of the issues of under recovery of the generator's dues.

IV. Ministry has issued direction to Central Electricity Regulatory Commission (CERC) under 107 of The Electricity Act, 2003 on 30th May, 2018 to allow pass through  of  increase  in  the  cost  of  generation  due  to installation  of  Flue-gas desulfurization (FGDs).

V. A new App 'PRAAPTI' (Payment Ratification and Analysis in Power Procurement  for  bring  in  the  transparency  in  payment  of  Generators)  has  been launched by the Ministry to bring more transparency in the system of payment of DISCOMS.   The  Generators  are  being  actively  encouraged  to  feed  in  their invoicing and payments  data. This portal would  be  expanded  to  include Transmission as well as Renewable Generators as well.

- VI.   Other measures
- 1) A meeting was held with various States to impress upon them to make use of the policy of flexibility in utilization of domestic coal (TOLLING) i.e. transfer of coal linkages to IPPs in return for the power generated from such coal. Gujarat and  Maharashtra  has  already  tied  up  500  MW  and  400  MW,  respectively,  of power  through  Tolling. This  will  help boost  the  demand  of  power  from  IPPs who can commence generation of power.
- 2) 'Saubhagya' is likely to increase demand for electricity in the country. Energy demand is growing at a healthy basis, i.e., approx 6%.

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