Coal news and updates

Power sector awaits new coal linkage policy

Notwithstanding the increased availability of coal, power sector players have made a fresh appeal to the Centre to soon release the coal linkage policy. They have argued that the coal linkage policy announced by the UPA government had covered 78,000 Mw to be commercially operational by March 31, 2015. However, the policy did not include capacity addition of another 78,000 Mw (of which about 20,000 Mw has valid coal linkages), which is under an advanced stage of implementation due to commissioning in 2016-17 and beyond.

Incidentally, Union Minister for Power and Coal, Piyush Goyal, during the Make In India Week said the new coal linkage policy will be soon declared. However, he did not give any time line for the same.

Association of Power Producers director general Ashok Khurana told Business Standard, ''The linkage/fuel supply agreement policy framework announced earlier was limited for 78,000 Mw, with expected COD (commercial operation date) set at March 31, last year. For projects beyond 78,000 Mw, so far there is no policy. These projects include those projects with coal linkages, projects that lost mines due to the Supreme Court order and projects have have achieved COD but have no coal.'' He opined lack of new coal linkage policy has thereby created huge uncertainty and the government therefore needs to announce it at the earliest.

Due to lack of policy framework in place, access to coal is provided on ''as is where is'' basis or through e-auction . However, the industry players said it cannot be a substitute for long term coal supply through linkage. For any power developer as he has to enter into long term PPA for utilization, he needs to be assured of minimum quantity and the pricing so that he can quote the output price in the PPA.

This apart, a developer, who is striving to complete the project in central India, said there is need for requisite quantity of coal in the yard to declare availability of 85 per cent in the old PPA and 90 per cent under new PPA looking at the penalties imposed for mis-declaration of availability.

Source: Business Standerd