Coal crisis: Private gencos ask govt for penalty mechanism for short supply of fuel

Independent power producers (IPPs) have asked the government to put in place “an equitable penalty mechanism” for all stakeholders — namely power plants, coal companies and the railways — to ensure that the risks of coal supply are balanced evenly between all parties. Currently, IPPs have to make full payments for coal in advance, while there is no penalty for coal companies, including Coal India (CIL) and the railways, if the desired quantity and quality of coal does not reach private generators on time.

Gencos owned by the central and state governments, however, are not required to make the payments to coal suppliers in advance. In the run up to the current coal crisis, many states were receiving lower coal supply because of their outstanding dues to CIL. The government recently said that Maharashtra, Rajasthan, Tamil Nadu, Uttar Pradesh and Madhya Pradesh have legacy issues of heavy dues to coal companies.