Govt likely to clear new coal linkage policy soon

The government's initiatives and global market conditions helped to bring down coal prices.

The Dollar Business Bureau

The Government is expected to clear the Coal Linkage Policy in the coming week to ensure adequate supply of coal to power plants via the reverse auction route. 

“The proposals for the scheme known as ‘SHAKTI’ is to provide coal linkage to power plants was on the agenda of the Cabinet meet held on Monday. But, it did not come up for discussion due to time paucity as the meeting was organised on a short notice,” reported PTI citing a source.

The proposal for the scheme would be discussed in the next Cabinet meeting that is going to be held sometime in the next week, the source said. 

According to the coal ministry proposal which was placed before the committee last year, a policy framework for long-term linkages will come with a committed offtake of power generated. Which means that power projects with a generation capacity of 41000 Mw are assured to get coal linkages with the added benefit of power purchase agreements (PPA) too.  

The new policy would help the coal producers in ensuring fuel supplies to power plants in an organised way. Private players like Adani Power, Reliance Power and others are likely to gain with this move. 

The government's measures and global market conditions have helped in bringing down the prices of coal and boosting local production. However, a mechanism is needed to provide coal linkage to power plants at reasonable rates. 

The new policy on fuel linkage would take into consideration this concern and put a proper mechanism in place for acquiring the dry fuel by power plants according to their schedules, the source said.

Presently, the companies which do not have any coal linkage, are going to be immensely benefited from the new fuel linkage policy, as these would get local supply of fuel at competitive rates.

As per the data of Central Electricity Authority (CEA), India has an overall installed generation capacity of around 314 GW that includes 188GW capacity from coal-based thermal sources, till January 2017. 

The daily coal stock report of CEA on March 5 showed that just one thermal plant out of the 110 monitored by the authority had supercritical stock of coal. This means that the plant had stock of coal for less than 4 days. 

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The Dollar Business Bureau - Mar 08, 2017 12:00 IST