BENGALURU (Reuters) – India’s Ministry of Power proposes that coal-fired power plants continue to sell power after concluding their agreements with buyers, according to a letter from Reuters, despite national promises to close old facilities to reduce pollution.
The proposal, if approved, would help old coal mines earn extra revenue, increase liquidity in short-term power markets and help distribution companies in states facing a power deficit gain access to cheaper power, the ministry said in the draft proposal dated Friday.
“It is in the interest of consumers to keep the electricity tax as low as possible,” said the letter, which was sent to industry power departments and heads of federal government-run tools such as NTPC Ltd.
Such a move would allow federally-powered power producers such as the NTPC to “sell power at any time” after distribution companies terminate an agreement after the end of their term, the ministry said.
Power Minister RK Singh and Finance Minister Nirmala Sitharaman have previously said they plan to close old coal-fired power plants. The Ministry of the Environment has also pushed for the closure of coal plants, which account for 80% of India’s industrial pollution, if they do not comply with green laws.
The result is still unclear. The Ministry of Power has sought comments from the states and the heads of federal government-driven power generators. A final decision on the proposal is not imminent.
A senior power ministry official said on Sunday that only inefficient facilities would be shut down.
“Cost-effective tools that provide cheap power will still work. Small inefficient facilities will be shut down, the official said.
Distribution companies run by states such as Punjab, Delhi, Andhra Pradesh and Odisha want to give up power granted by federal government-run tools after the factories have completed 25 years, the power ministry said.
The states cited reasons such as the availability of surplus power and high electricity costs as reasons for the transmission of power allocated to them under the agreements.
A list compiled by the Ministry of Energy in 2019 shows distribution companies that want to give up power generated from tools with a capacity of 5.75 gigawatts.
Reporting by Sudarshan Varadhan; Edited by William Mallard