Govt clears coal linkage methodology for power producers

New Delhi: In a major move on Wednesday, the government allowed the independent power producers to switch to supply dry fuel aiming to lower the supply shortage and to revise the transportation and generation cost.

"An Inter-Ministerial Task Force (IMTF) was constituted to undertake a comprehensive review of existing coal sources of Independent Power Producers (IPPs) having linkages and consider the feasibility for rationalization of these sources with a view to optimizing transportation cost, given the various technical constraints," ministry's official statement mentioned.

It also said that the coal linkage rationalization shall be an exercise in which the coal linkage of a Thermal Power Plant (TPP) of an Independent Power Producer (IPP) may be transferred from one Coal Company to another based on the availability during the fiscal and future coal production plan of the coal company.

The Everest Power Private Limited, Ratnagiri Gas and Power Private Limited, NTPC-Sail Power Company Private Limited, TATA Power Delhi Distribution Limited are among the other IPPs who will be able to move from one coal supplier to another based on the availability during the fiscal and future production plan of the company, which was fixed earlier if the company had signed a supply pact.

"The underlying objective behind the exercise shall be to reduce the landed cost of coal due to the reduction in transportation cost. The savings achieved due to this reduction of the landed price of coal are required to be passed on to the DISCOM/consumer of power" the ministry said.

The official statement added further that the exercise aims to reduce the distance by which coal travels, thus, easing up the Railway infrastructure for gainful utilization for other sectors. 'The one time process of calling for the requests of the IPP for linkage rationalization shall be undertaken jointly by CIL, SCCL and CEA in a transparent manner," it said.

The task force's suggestion also records that the Fuel Supply Agreement (FSA) of the rationalized source from any coal company would be signed or implemented only after the appropriate Electricity Regulatory Commission approves the supplementary agreement.

"Any dispute as and when it arises would be resolved as per the provision of the Arbitration and Conciliation Act," it added further.