Power Ministry Unveils Norms For Allocating Coal Linkage To Plants Without Purchase Agreements
Coal yard at the Kirshnapatnam port (Photographer: Prashanth Vishwanathan/Bloomberg)

Power Ministry Unveils Norms For Allocating Coal Linkage To Plants Without Purchase Agreements

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Power plants not having power purchase agreements will start getting coal supplies or linkages under auctions from Coal India Ltd. and Singareni Collieries Company Ltd. in a few months, which would help reduce stress in the sector.

According to methodology issued in this regard by the union power ministry on Monday, CIL and SCCL will earmark coal mines for supply to such power plants and auctions would be done every quarter.

Earlier, PPA was a pre-requisite for getting coal linkage. But, the government relaxed the norms under Shakti, or the Scheme for Harnessing and Allocating Koyala [Coal] Transparently in India, policy this year in March.

For this purpose, the power ministry on Monday issued the methodology for the same.

The Ministry of Power issued the methodology for allocation of coal for sale of power through short-term and day-ahead market in power exchange. So far, coal was allocated to long-term and medium-term PPA holders. With this, stressed power stations may be revived. Further, this will also enable deepening of power market being traded through power exchange.
RK Singh, Power Minister

Making coal available for short-term to stressed power plants was one of the recommendations of the high-level committee headed by then Cabinet Secretary PK Sinha. The panel had submitted its report in November last year.

The methodology provides that within 45 days [by Jan. 16, 2020], the coal companies, CIL and SCCL, will earmark areas and mines within their subsidiaries that will be allocated for use as per these guidelines and publish the same on their websites indicating the quality of coal (gross calorific value/grade), the quantum of coal available, period for which such coal shall be made available and the schedule for start of supply of coal.

It also provided that auctions for coal linkage under this methodology shall be carried out every quarter to cater to the dynamic requirements and demand variations in short-term and day-ahead markets. An annual calendar shall be published on coal companies' websites showing the months in which the auctions will be held.

The quantity of coal linkage that a plant may bid will be decided as per the heat rate, which shall not be more than 2,600 kilocalorie/kilowatt hour for the untied capacity of the plant (for which the PPA is not signed).

The Central Electricity Authority will call for applications and publish a list of eligible plants, their heat rate and capacity.

Also read: Coal India Production Rises For Second Straight Month In November

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