Coal news and updates

Low PLF trend to continue into FY17, says Ind-Ra

The trend of low plant load factors (PLFs) is set to continue over FY16-17, given the lacklustre demand and high projected capacity additions until FY17, Ind-Ra said in a research report. PLFs for thermal and lignite plants decreased to 61.6% in 8MFY16 from 64.4% in 8MFY15.

The limited number of long-term PPAs indicates that states are not envisaging significant growth in power consumption for the short to medium term, Ind-Ra said.

Projects with minimum 70% tied-up long-term capacities, remunerative tariffs and no evacuation issues are better placed to weather a downturn than those with high merchant sale compositions, given the muted merchant tariffs, Ind-ra further said.

Power projects awarded through Case 2 biddings and the memorandum of understanding route face less uncertainties in general because of better fuel cost recoveries than those awarded through Case 1 competitive biddings.

Out of the commissioned coal-based IPPs of 52,000MW, 37,500MW have long-term power purchase agreements (PPAs). Several IPPs embraced the 5/25 refinancing scheme and stretched the repayment tenors to ease the stress on cash flows. Ind-Ra expects this trend to continue in FY17 as well.