Coal news and updates

State-owned Coal India has floated the first tender operationalising SHAKTI scheme providing coal linkage to thermal power projects through the auction route.

According to the tender document, the bidders will have to submit their expression of interest by August 14, 2017, for seeking coal supplies.

Earlier in May this year, the Cabinet Committee on Economic Affairs had approved "fading away of the existing LoA-FSA regime and introduction of a new more transparent coal allocation policy for power sector, 2017-SHAKTI (Scheme for Harnessing and Allocating Koyala (Coal) Transparently in India). The move is likely to ease stress on account of non- availability of linkages to power sector projects.

According to the tender, all those bidders that have already concluded PPAs (power purchase agreements) will be eligible, which have been adopted or approved by the appropriate regulatory commission on or before May 17, 2017.

The existing coal linkage holders are not allowed to surrender their letter of assurance (LoA) or fuel supply agreements (FSAs) to participate in this auction.

Thermal power projects, part of 78,000 mw, which could not be commissioned by March 31, 2015, are eligible for coal withdrawal if the plants are commissioned before March 31, 2022, under the scheme.

The coal supply to the TPPs has been made in line with the provisions of the New Coal Distribution Policy (NCDP), 2007.

Till 2010, Coal India (CIL) issued LoA for approximately 1,08,000 mw capacity and no new LoAs were issued thereafter due to the prevailing scarcity. The CCEA in 2013 had directed CIL to sign FSAs with thermal plants of about 78,000 mw capacity.

In an attempt to cut power purchase cost, Gujarat has also invited tenders to buy coal-based electricity from independent power producers that would agree to sell power at less than Rs 2.82 per unit.

The reverse auction for procuring 1,000 mw of power through this mechanism will be held on September 8.

A power ministry official said the move is expected to bring some respite to power plants, with a total estimated capacity of 28,000 mw, which do not have regular fuel supply arrangements with Coal India.

In May, 2016, the Union Cabinet had approved the proposal for allowing flexibility in utilisation of domestic coal among power generating stations.

The methodology for use of transferred coal in independent power producers (IPPs) was issued by the Ministry of Power on February 20, 2017, and the Gujarat tender follows this. 

Source: Times of India