Coal news and updates

‘Tariff minimisation at discoms key for power sector’

March 20: Tariff minimisation at the distribution companies (Discom) level should be the guiding principle when determining coal linkage and LoA auctions, the Inter-Ministerial Committee (IMC) set up for the task, which met on March 9, 2015, has proposed.

It was felt that first priority must be given to plants in operation or near operation which have capacity tied through Case I bids and are without a linkage or a captive block.

However, here the Additional Secretary pointed out that capacity already tied through Case I bids may not reflect passing of value of fuel to consumers as the tariff has already been decided for this capacity. However, on further deliberations, it was suggested that a suitable framework may be considered for capacity already tied through Case I bids.

Among other proposals discussed, it was said that duration of a linkage may be linked to the duration of the power purchase agreement (PPA). However, a representative of the Central Electricity Authority (CEA) pointed out that PPAs are dynamic and change every year. Therefore, it may not be appropriate to link the duration of linkage to the duration of PPAs.

It was also discussed that power-deficit states may be given preference for linkage allocation. However, the CEA representative stated that in view of the National Integrated Grid, power deficit should not be made criteria for allocation of linkage to states. It was suggested that each state may be allocated some quantity of coal linkage on the basis of which discoms may invite Case I bids.