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Assured coal supply for stuck power plants

The order refers to the plants which are part of the tranche of projects totalling capacity of 78,000 Mw for which a presidential directive was issued in 2013

The central government will bail out close to 21,400 Mw of power plants by assuring coal linkage through new fuel supply agreements (FSAs). These plants comprise the power projects whose commissioning date was delayed due to several reasons, including fuel supply crunch.

The move comes after the power ministry revised the commercial operation date (COD) of these plants. These plants were originally supposed to be commissioned by March 2015. Now with assured fuel supply, 21,400 Mw worth of capacity would kick-start. Of this, 2,415 Mw would get tapering linkage and rest would be long-term linkage.

The order refers to the power plants which are part of the tranche of projects totalling capacity of 78,000 Mw for which a presidential directive was issued in 2013 to assure coal supply from Coal India and its subsidiaries. Most of the plants faced delays what with coal supply also dwindling.

"The issue of signing of FSAs and supply of coal to the power plants that are part of 78,000 Mw, commissioned/to be commissioned in 2015-16 has been examined by this ministry and it has been decided that CIL may be directed to sign FSAs with such plants as are commissioned/to be commissioned in 2015-16 and supply coal as per FSA and government policy to such power plants which are part of 78,000 Mw. This may be ratified by CCEA in due course," said the order dated 15 October.

Around 50 power plants are eligible for the new FSAs, out of which 23 would be commissioned during FY16, most of them in the last quarter. Close to 90 per cent of them are privately held, rest are either central or state government owned. The coal would be supplied from various subsidiaries of Coal India, major being SECL, CCL and MCL.

Presidential directive was issued to Coal India Limited (CIL) in 2013 for signing FSAs for a total capacity of 78,000 Mw during the remaining four years of the 12th Plan subject to fulfilment of all formalities by the concerned party (power producers). The coal supply however, was dependent on the power purchase agreement the power producers signed for sale of power.

"Supply of domestic coal to these projects has been restricted to 65 per cent, 67 per cent and 75 per cent during these four years, keeping in view the availability of coal," said the order.

CIL was also allowed to import coal and supply the same to the willing power plants on a cost plus basis.

source: http://www.business-standard.com