Power producers to meet PM, FM over fuel shortage

Private power producers are scheduled to meet Prime Minister Manmohan Singh and his cabinet colleagues, including finance minister Pranab Mukherjee, today to discuss the perennial shortage of fuel for their plants, exacerbated by soaring prices of imported coal and a growing shortage of natural gas.

A delegation of power producers led by Tata Sons chairman Ratan Tata, Reliance ADAG chairman Anil Ambani, Tata Power deputy chairman Cyrus Mistry, Gautam Adani of Adani Power, G M Rao of GMR Energy and Anil Agarwal, chairman of Sterlite Energy, will meet senior members of the government under the aegis of the Association of Power Producers (APP) to discuss urgent policy measures to mitigate their fuel woes and help make their projects economically viable.

A majority of these industry leaders, including Prashant Ruia and Madhusudan Rao, met over dinner on Tuesday night to chalk out and present a united case before the prime minister. Issues like delayed environmental clearances, high customs duty on imported coal, shortage of domestic coal and gas as also poor health of the fuel distribution companies were reportedly discussed.

From the government side, apart from the prime minister and the finance minister, power minister Sushilkumar Shinde, environment and forests minister Jayanthi Natarajan, coal minister Sriprakash Jaiswal and Planning Commission deputy chairman Montek Singh Ahluwalia are likely to take part in the meeting.

''The power sector is going through a critical phase and unless urgent policy interventions are made it will result in idling of capacity. Besides, any rise in input costs will be a pass through, and thus power tariffs will also go up,'' an APP office-bearer said.

The perennial coal and oil shortage threatens the future of a number of upcoming power projects in the country, including the ultra mega power project (UMPP) of Reliance Power at Krishnapatnam in Andhra Pradesh.

Indonesia, a major source of imported coal, has decided that coal mined in the country should be sold at international market prices. To secure the fuel at competitive prices, a number of Indian power producers have either procured coal assets in Indonesia or have entered into long-term and spot contracts to import coal.

The producers are also likely to seek gas allocation for their yet-to-be-commissioned gas-based power projects. In a recent letter to petroleum minister S Jaipal Reddy, the APP has said about 8,200 MW of gas-based generation capacity can be commissioned in the next 18 months.