Coal news and updates

Mandatory long-term PPA norm to impact power sector

January 29: The condition laid down by the government for new thermal power projects to have mandatory long-term power purchase agreements (PPAs) to get coal supplies under fuel supply agreements (FSAs) is a regressive step and may affect expansion in the sector, an official from the Association of Power Produces (APP) said.

"While the government undertook several positive initiatives to tide over domestic shortage in coal, the effectiveness of these measures has been negated in part due to other policy announcements. An example of this is the condition of having a mandatory long-term PPA for availing coal supplies under FSAs," the official said.

He said in cases where long term PPAs are not readily available, projects with medium-term PPAs should be allowed to avail of supplies under FSAs with Coal India Ltd (CIL).
Stating that these factors are beyond the control of the developers, he said many private players have sought relief from the government.

The adverse scenario has also made the banks wary of lending to power projects, he added.