New Delhi: Against the backdrop of the government mulling over the allocation of more coal to state-run NTPC, private power producers like Reliance and the Tata have asked the Coal Ministry to allocate the dry fuel on the basis of project merits, rather than ownership.

In a letter to the Coal Ministry, the Association of Power Producers (APP) has also stressed on the need for a level-playing field in the allocation of coal.

Coal should be allocated based on the merits of projects and not on the basis of ownership, APP Director General Ashok Khurana in a letter to Coal Secretary Alok Perti.

APP is a grouping of many power generators, including Reliance, the Tata, Essar, Adani Group and GMR Energy.

Khurana also said that coal is a scarce natural resource and it must be distributed on the basis of its efficient use and in a manner to maximize the benefit to end-consumers of power.

In the wake of power supply disruptions in different parts of the country, the Coal Ministry recently said that it would make efforts to provide more coal to the country's largest power producer, NTPC.

Coal shortages due to factors like the Telangana agitation and Orissa floods have hurt power generation at many NTPC plants, which are operating at sub-optimal levels.

Last Wednesday, Coal Minister Sriprakash Jaiswal said his ministry will make efforts to provide more coal to NTPC.

"We will try to make available more coal to NTPC through e-auction," he had said. However, further details on the proposal were not available.

e-auction is a process under which coal is sold at market prices through an online bidding process.

According to Khurana, importing coal is not a solution to the country's fuel supply problems.

"Supply of low and varied quantities of indigenous coal may have serious functional ramifications for power plants.
"... The boilers here can accept only a blend of not more than 15-20 per cent of the imported with domestic coal," he wrote in the letter.

This technical constraint makes it difficult for the existing thermal plants to provide an undertaking for accepting unspecified quantities of imported coal, he noted.

Fuel Supply Agreements (FSAs) are granted for a period of five years, whereas the commitment for supply of energy under Power Purchase Agreements (PPAs) is between 25-30 years, he added.

Khurana pointed out that for a developer to meet its obligations to procurers, there cannot be any disconnect between the PPA and FSA.

The lenders would also be extremely reluctant to finance a project which has no sustained and assured supply of fuel, he said in the letter.