Coal news and updates

IMC refuses to extend tapering linkages to five power plants

October 01: The third meeting of the Inter-Ministerial Committee (IMC), for considering issues related to the extension of supply of coal to certain end-use plants linked to blocks under the Tapering Linkage Policy of the Ministry of Coal (MoC), has refused to extend tapering linkages to a total of five power plants.

The IMC, however, in its meeting held recently, said the matter should be referred to the Cabinet Committee on Economic Affairs (CCEA) after ascertaining the status of all the projects.

The panel further said that, while doing so, the availability position of coal vis-à-vis the commitments already made may also be kept in view. In that case, the IMC feels, it would be advisable to first have a review of these projects by the Standing Linkage Committee-Long term (SLC-LT).

It may be recalled that 5 power projects, namely, Mejia TPS unit 8 of Damodar valley Corporation (DVC), Ukai unit 6 of Gujarat Electricity Board (GEB), Parli unit 8 of Mahagenco, Bellary TPP unit 2 of Karnataka Power Corporation Limited (KPCL) and unit 2 of DB Power Limited at Champa, Chhattisgarh, all included in the 78,000 MW capacity plan approved by the CCEA, had been allotted tapering linkages.

These power projects had not signed the fuel supply agreements (FSAs) as the linked coal blocks could not be developed as per schedule and the quantities admissible under the Tapering Linkage Policy were insufficient to meet their requirements.

These coal blocks could not be developed because of the delay in environment and forest clearances and land acquisitions etc. However, these blocks were not de-allocated either, so far.

Under the tapering linkage policy, the normative date of production is determined on the basis of the zero date (the date of allotment) and the amount of coal supplied in the first year would be 75%, 50% in the second year and 25% in the third year and, thereafter, there would be no supplies.

However, these five power projects have been delayed because of various reasons, which include land acquisition issues.

The IMC now feels these projects had been approved under the 78-GW policy that had been approved by the CCEA for coal supplies and "even if the request in these cases was for supply of coal for the next one or two years, this was a significant departure from the Tapering Linkage Policy followed by the ministry so far."

It further added that the "normative date had never been compromised upon", the day from which the tapering supply of coal begins.

Tapering linkage is an interim measure for partial supply in timed anticipation of the coal block going to production.

The IMC further said, when all the units come up under the 78,000-MW plan, it would necessitate a revisit to the annual contracted quantity (ACQ) to reduce it further from 65% in the first year.