MoP directs CGPL to run imported coal plant at full capacity through June

The Ministry of Power (MoP) has issued directions to Coastal Gujarat Power Ltd. (CGPL) under Section 11 of the Electricity Act, 2003, requiring the company to operate its imported coal-based (ICB) power plant at full capacity. The order, dated March 22, 2026, takes effect on April 1 and remains in effect through June 30, 2026.

The ministry cited the prevailing demand-supply situation and an anticipated rise in electricity demand over the coming months as grounds for invoking Section 11, which allows the central government to direct generating companies to operate in the public interest.

Under the order, a committee comprising representatives from the MoP, the Central Electricity Authority (CEA), and NTPC Ltd. will determine benchmark power supply rates. These rates must cover prudent costs, including current coal prices, shipping and operation and maintenance expenses, along with a fair margin. Benchmark rates will be reviewed every 15 days to account for fluctuations in imported coal and shipping costs.

Power Purchase Agreement (PPA) holders will have the option to procure power either at the committee-determined benchmark rate or at a mutually negotiated rate with CGPL. Fixed charges will continue to be governed by existing PPAs or mutually agreed terms. Where a distribution company (DISCOM) is unable to agree on rates or fails to make weekly payments, the corresponding quantity of power will be offered to other PPA holders, and any remaining power will be bid on power exchanges, with sale contingent on the market clearing price (MCP).

The order lays out a payment security framework requiring procurers to maintain an unconditional Letter of Credit (LC). In the absence of an LC or advance payment, or if an LC is not recouped after encashment, CGPL is entitled to sell the power on exchanges without seeking the procurer’s consent. Any net profit from such exchange sales is to be shared equally between the generator and the procurer every month.

On scheduling, if a PPA holder does not wish to draw power in a given week, it must notify CGPL at least three days in advance. Failure to do so allows the plant to generate and sell to any other distribution licensee at the committee rate plus fixed charges, with no fixed charge liability on the original PPA holder for that period. Once a non-requisitioning period is declared, the PPA holder loses entitlement to power for that period.

The energy charge rate (ECR) will be calculated as the lowest of: the cost of coal linked to an import price index; the index-linked cost minus any mining profit where coal is sourced from a country where the seller or a group company owns a mine; or the actual ECR based on the seller-declared price of imported coal. Where a mine-owning seller is involved, the generating company must deduct the imputed mining profit from its cost claims.

CGPL is also required to maintain coal stocks in line with existing norms and submit weekly generation and sales reports to the MoP. The ministry noted that non-compliance could attract penalties under the Electricity Act, 2003, and that the directions may be extended to other ICB plants if warranted.

The featured photograph is for representation only.