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Refer coal linkages duration extension issue to CCEA: Panel

Amid some power producers seeking extension in the duration of coal linkages to their plants by one to two years, an inter-ministerial panel has suggested referring the issue to the Cabinet. Also Read: Recovery of costs key to survival of power cos: Experts Under the current tapering linkage policy, 75 percent of the normative quantity is supplied to the end-use plant in the first year; 50 percent, in the second year and 25 percent in the third year. No supplies are allowed after the third year. According to a Coal Ministry document, "Even if the request in these cases was for supply of coal for next one or two years, this was a significant departure from the tapering linkage policy followed by the Ministry thus far. "Therefore, it would be appropriate if the issue is referred to the Cabinet Committee on Economic Affairs (CCEA) after ascertaining the status of all the projects with tapering linkages approved for coal supplies." The panel under the chairmanship of Additional Secretary of Coal Ministry AK Dubey, was set up to make recommendations on the issues related to supply of coal to certain end-use plants linked to the coal blocks. Members of the Inter-Ministerial Committee include those from the ministries of power, steel and finance among others. Power producers which had requested that coal supplies to their plants be provided for more years include Damodar Valley Corp, Gujarat State Electricity Board (GSEB) and DB Power. Tapering Linkage is the short-term linkage provided to those coal consumers who have been allocated captive coal blocks for meeting the fossil fuel requirements of their end use plants but where coal production has been delayed due to various reasons, including lack of environment and forest clearances. "It was pointed out that the Tapering Linkage Policy as well as issues relating to determination of normative (actual) date of production were involved in these cases. These projects formed part of 78,000 MW list that was approved by the CCEA for coal supplies." the document said. It added that the 'normative date' had never been compromised on any account and the tapering linkage has been an interim measure for partial supply in timed anticipation of the coal block going into production. "Finally, when all the units of 78,000 MW come up as projected, it would necessitate a revisit to the ACQ (Assured Contracted Quantity) to reduce it further from 65 per for the first year. This was indicated in the Presidential Directive ...that it would be subject to review after FSAs (Fuel Supply Agreements) for 60,000 MW has been signed," the ministry said.

Source: www.moneycontrol.com