The recent move by the Ministry of Environment and Forests (MoEF) to prevent import of low-quality coal (below 5000 kcal GCV) for ultra mega power projects (UMPPs) has raised many an eyebrow in industry circles.
India generally imports inferior grades (below 5000 GCV) of fuel for thermal power projects. The norms, if applicable to the entire power sector, will limit imports substantially.
Moreover, there are concerns if the norms will be applicable to two existing UMPPs implemented by Tata Power (Mundra, Gujarat) and Reliance Power (Krishnapatnam, Andhra Pradesh). Both the companies are demanding power tariff hikes in view of unforeseen rise in imported fuel cost.
An application from Tata Power (linked to Indonesian coal) for change in PPA (power purchase agreement) terms is pending with the Cabinet Committee of Economic Affairs. According to the PPA terms, such revisions may be granted only in case of a cost push pertaining to change in norms and parameters in India.
Ashok Khurana, Director-General, Association of Power Producers (APP), however, felt that the norm should be applicable for environment clearance to all future UMPPs only.
“They (government) cannot implement it with retrospective effect to projects which are cleared and under commissioning,” Khurana told Business Line .
He, however, admitted that the circular did not specifically mention about existing projects. “The tone and tenor of the circular indicates it is for future projects. However, we will soon seek an explanation from the Environment Ministry,” he added.
According to him, bulk of India’s thermal coal imports, especially those from Indonesia, are below 5000 kcal a kg calorific value. APP will also seek members’ views on the issue.
Interestingly, the circular also stipulated the sulphur and ash content at 0.8 per cent and 12 per cent, respectively. Apparently, this should impact import of South African coal, which has higher sulphur content.