Coal-fired thermal power plants are getting ready to begin talks on signing supplementary power purchase agreements (PPAs) after the power ministry invoked emergency provisions.

Analysts are projecting multiple benefits: they feel the development could lead to a major improvement in the capacity utilisation or plant load factor (PLF) of thermal power units apart from a rise in merchant power rates.

Besides, thermal coal price has fallen in the global markets which could further improve their bottomline that may be reflected in their financial performance.

The power ministry had recently invoked emergency powers to direct power plants that run on imported coal to maximise output and sell surplus power in exchange. The order will be effective from March 16 to June 15.

In an interview to CNBC TV18, Tata Power managing director said that while power plants are looking to negotiate power tariffs at cost plus basis, the imported coal prices which had touched $300 per tonne last year are expected to cool to $200 a tonne. He further pointed out that the company will focus on operating its power plants at full capacity.

Analysts said the coal cost could go up as the unofficial import ban of Australian coal by China has been lifted which could push up demand.

China has started buying Australian coal this month, signaling the end of an unofficial ban that ran for over two years, according to market sources and S&P Global Commodity Insights data.

According to analysts at JM Financial, there will be a significant improvement in the capacity utilisation of thermal power plants and a rise in merchant power rates.

A senior director of a central power utility said on Wednesday that following an earlier power ministry directive in January plans have been set in motion to float tenders to import the coal for blending purposes. “There is a stricture that domestic coal supply of gencos will be restricted on a pro-rata basis if the instruction is not followed,” another industry official said.

Thermal coal imports grew 14.7 per cent to 161.18 million tonnes in 2022.