Coal supply uncertain for India's Mundra power plant

The world's largest coal-based power plant is struggling to survive at the back of coal supply problems.

A high-level inter-ministerial panel will take a call on fuel supply for Adani Power’s Rs 25,000-crore imported coal-based power plant at Mundra in Gujarat. The infrastructure and mining major had asked the government to review an earlier decision to cut off domestic coal supply for the flagship 4,620 megawatt project.

“The Standing Linkage Committee (SLC) for the power sector, in its meeting on January 7, may take a view on the request of Adani Power for restoration of a decision for grant of 30 per cent linkage for their Mundra plant,” said a senior coal ministry official.

The plant has been built to consume up to 30 per cent domestic fuel blended with imported coal. In January 2010, the panel had decided to grant coal linkage to the project to meet 30 per cent of requirement from state-owned Coal India Ltd. However, that decision was reviewed in April 2011 after the miner refused to meet the commitment, arguing domestic coal supply for imported coal-based stations was not factored in the Planning Commission’s estimate given to it.

This showed the plant was running on low plant load factor (PLF) as it was designed to use 30 percent indigenous blended coal, which was not available. The plant has been running at a PLF between 80 percent and 85 per cent this year. The power ministry has recommended restoration of the original 30 percent domestic linkage for imported coal-based plants.

Both Adani Power’s project and the Mundra UMPP have been facing rising cost of imported fuel after last year’s regulatory changes in coal-exporting. Indonesia and Australia made coal dearer for these plants, leading to jacking up of generation cost. Their buyers, however, have refused to bear higher charges. Adani Power had signed two power purchase agreements with the Gujarat government for supply of power at Rs 2.3 a unit and Rs 2.8 a unit.

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