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India: Providing Coal Linkages To Power Producers

In its endeavour to prevent the assets created by the power companies becoming non-performing assets and in order to ensure that such assets are put to use, the Ministry of Power proposes to provide coal linkages to those power plants which are stressed or in short supply of coal on account of not having coal blocks or linkages or not having long-term PPAs, the Ministry of Coal in June this year had stipulated that a separate quantity within the e-auction quantity may be earmarked for power sector.

The Ministry proposes that in the first instance, the e-auction may be conducted separately for PPA holders (long and medium PPAs) and for others (short-term PPAs/ without PPA). In the following rounds of e-auction for the coal linkages, the quantities of coal that may be provided may be reviewed based on the experience of the first round.

The floor price for the coal linkages through the e-auction window for PPA holders will be the price notified by the Coal India Limited plus 20% premium and for others, the floor price will be price notified by the Coal India Limited plus 40% premium.

source: http://www.mondaq.com