Coal news and updates

Coal linkage lifeline for power projects

The government has given a lifeline to over 21,000 mw of power projects that are getting commissioned this year but are without any firm coal linkage. The decision is to offer them fuel even though the projects got delayed and have missed the March 31, 2015 deadline set by the Cabinet for getting assured coal supplies from Coal India (CIL).

“The coal ministry has directed CIL to sign fuel supply agreements (FSAs) with power plants that are commissioned or would be commissioned in 2015-16. These are part of the 78,000 mw of projects with which the state-owned coal producer is under obligation to enter into a supply agreement under a Presidential directive later,” said a government official privy to the development.

The move will directly benefit 13,500 mw of power projects of companies such as NTPC, Adani, Lanco, GMR and Sterlite that are awaiting coal supplies from CIL under long-term FSA. It could also allow coal linkage advantage for projects adding up to another 8,000 mw relating to companies such as Lanco, provided they are successful in squeezing deadline and complete the projects on time.

As per a recent survey by Central Electricity Authority (CEA), these projects are set to miss even the 2015-16 deadline.

The problem for these projects arose when state-owned CIL refused coal supplies to projects slated for commissioning after March 2015 as it is not mandated to meet the fuel needs of such projects.

The projects of these companies got delayed due to reasons beyond control of the developer like delay in supply of equipment, non-availability of power purchase agreement (PPA), transmission constraints, law and order issues and other statutory permissions.

“The signing of FSA with CIL will help us to immediately feed the grid with electricity generated at our stations,” said an executive of a private sector power company not willing to be named.

In June 2013, the cabinet committee on economic affairs (CCEA) decided to provide coal supplies to 78,000 mw power projects, which had been or were likely to be commissioned March 2015 to prevent projects from getting stranded. This decision was later conveyed through a Presidential directive issued in July, as CIL was reluctant to commit coal for this capacity.

“The issue has finally been resolved as the Central Electricity Authority (CEA) has provided us the probable list of projects (from the 78,000 mw) that would be commissioned this year. The list includes both regular projects and those needing coal under a tapering linkage,” the coal ministry official quoted earlier said.

Apart from this list, the coal ministry has also extended commissioning deadline for another batch of another batch of 4,660 mw of projects that do not have any fuel linkage.

It has directed CIL to look at providing linkages to these projects subject to the availability of coal and on the condition that such supplies do not adversely impact the availability of coal for the identified plants of 78,000 mw capacity.

In addition, CEA has provided commissioning schedule for another 9,940 mw of power projects that face similar fate on provision of coal linkage by CIL in the best-case scenario.

The decision to provide long-term coal linkage comes at a time when an inter-ministerial group is working out modalities for auction of coal linkages. This auction may be started for projects that do not qualify for getting linkage in the current round and are slated for commissioning after March 31, 2016.

source: http://www.mydigitalfc.com