Kochi: In a major move to avert night-time power shortages, Kerala has decided to utilise a Central coal quota granted two years ago. The Kerala State Electricity Board (KSEB) has floated a tender to procure 500 MW of power daily for 25 years from thermal power plants. Under the agreement, coal for the power-generating companies will be sourced directly from Coal India Limited.

Because this supply will be delivered round the clock, the state expects substantial relief during peak demand hours at night, when hydroelectric and solar generation fall short.


Past inaction and threat of cancellation

The Central Government allocated coal required to generate 500 MW of power to Kerala in August 2024 under its 'SHAKTI' scheme. However, the allocation remained unutilised for two years as successive authorities failed to initiate long-term power purchase agreements to secure electricity at lower tariffs.

Kerala has a history of letting similar allocations slip away. In 2007, the Union Government assigned the Bhaitarani coal block in Talcher of Odisha to Kerala. After 7 years of non-utilisation, the Centre revoked the allocation in 2014. The present tender was issued amidst growing concerns that the 2024 coal quota would meet a similar fate.

 

Bidding terms and tariff expectations

Participating power generators are required to commence the 25-year supply starting June 2027. Since KSEB will transfer its Coal India fuel allocation to the winning power producers, the selection process will focus primarily on securing the lowest possible unit cost.

Historically, Kerala received 465 MW of coal-linked power at a competitive tariff of ₹4.69 per unit through a similar allocation transfer, before that contract was cancelled following administrative controversies. KSEB officials hope to land a final tariff close to that previous rate.

Meanwhile, Kerala has declined to accept a separate proposal from the Union Power Ministry suggesting that the state construct its own coal-fired thermal plant to permanently address its power deficits.