Government clears coal linkage methodology for IPP

The government on Wednesday said it has finalised the methodology for rationalisation of coal linkages for independent power producers (IPP).

Under the new methodology, dry fuel can be supplied to IPP plants by a coal company other than the one with which they have signed the pact.

The methodology was approved on the basis of the recommendations of a an inter-ministerial task force to optimise transportation cost, among other benefits.

"Coal linkage rationalisation shall be an exercise in which the coal linkage of a TPP (thermal power plant) of an IPP may be transferred from one Coal Company to another based on the availability during the fiscal and future coal production plan of the coal company," the Ministry of Coal said in a statement.

It said an Inter-Ministerial Task Force (IMTF) was constituted to undertake a comprehensive review of existing coal sources of IPPs having linkages and consider the feasibility for rationalisation of these sources with a view to optimise transportation cost, given the various technical constraints.

The statement said the exercise will be voluntary on the part of the TPPs and aims aims to reduce the distance by which coal travels, thus, easing up the railway infrastructure for utilisation for other sectors.

"The one time process of calling for the requests of the IPP for linkage rationalisation shall be undertaken jointly by CIL, SCCL and CEA in a transparent manner," it said.

This linkage rationalization shall be considered only for IPPs having linkages through allotment route, the statement said, adding that they will also state the Minimum Order Quantity (MOQ) for which the linkage rationalisation shall be requested.

It said the Fuel Supply Agreement (FSA) of the rationalized source from any coal company would be signed/implemented only after the appropriate Electricity Regulatory Commission approves the supplementary agreement.

On disputes, the government said these will be resolved as per the provision of the Arbitration and Conciliation Act.

"The proposed rationalisation of linkages is transparent, objective and creates a level playing field for IPPs in each domain. It attempts to make optimal rationalisation of the vital natural resources across the power units of IPPs," the statement said.

It said the reduced landed price of coal will lead to savings in the cost of power generated as well as coal transportation.

The savings will be passed on to the Discom/ consumers of power.