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Traders wary to supply coal to defaulting utilities

With low PLF affecting the power plants’ liquidity position, a section of coal traders are becoming increasingly wary to supply coal to defaulting units.

“Some power plants are not being able to pay for coal supplied. This is mainly so because of the liquidity problems,” market sources told ICMW.

“These units are not clearing their outstanding payment to even the large traders. Consequently, such traders are now wary to supply coal to such units,” they said.

In one such case in Chhattisgarh, the sources said, the problem lies with the lack of knowledge of the promoter group in power business. “As they have little experience in power, they find it tough to sail through the challenging times like this when the PLF is at a record low level,” they observed.

While power utilities defaulting payment to state-owned miners like Coal India Ltd (CIL) is a common occurrence, the failure of private players to clear dues is becoming a menace in recent months, they added.