Power companies undergoing insolvency proceedings to receive funds for importing coal
Given the unprecedented power crisis and coal shortage, the government has directed the state-owned power finance companies — Power Finance Corporation (PFC) and Rural Electrification Corporation (REC Ltd) — to take necessary action to arrange short term loans for a period of six months with adequate safeguards, for imported coal-based plants (ICB) which are under stress or undergoing insolvency proceedings.
According to a directive issued by the Power Ministry, these plants need working capital to buy coal and start generating power in order to restart their operations.
Union Minister for Power and New and Renewable Energy held a meeting on 9th May 2022 on issues related to working capital to ICBs which are stressed or are undergoing insolvency proceedings.
In view of increased demand and unprecedented pressure on domestic supplies of the fossil fuel, Ministry of Power, on 05 May 2022 issued directions to all ICBs under Section 11 of the Electricity Act, 2003 to operate and generate power to their full capacity, even for projects which are stressed or under NCLT.
“These directions will ensure that additional electricity is produced through imported coal and will be a net addition,” said a statement by the Power Ministry.
According to information provided by the Ministry of Power, there are 104 coal-based power plants with critical level of coal stock. Out of these, 11 are ICBs. They have a total capacity of 17,255 MW. The coal-based power plants have a total capacity of 203,334 MW.
Coal-based power generation in the country has witnessed a growth of 9.26% to 1,02,529 million units (MU) in April as compared to the year-ago period. Total power generation has also increased in April, 2022 to 136565 MU from 133584 MU in March, 2022.
The country has been facing severe power crisis due to shortage of fuel in power plants across India.
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