Moily helps fast-track extension of coal linkage to 9 power projects

The cabinet committee on economic affairs (CCEA) on Thursday approved the supply of coal to nine of the 24 units in which the development of coal blocks was delayed due to the 'Go-No-Go' policy of the ministry of environment and forests on the basis of fuel supply agreements (FSA), subject to review or readjustment wherever necessary.

The decision, which comes a day after minister of environment and forests Jayanti Natarajan quit the union cabinet and was replaced by petroleum minister M Veerappa Moily, will help provide coal linkage to nine power projects with investments worth Rs60,000 crore, an official release said on Thursday.

There were 24 thermal power plants (TPPs) with tapering linkages within 78,000 MW capacity. Only the quantities admissible under the tapering linkage policy were approved for such plants.

Subsequently, requests were received from developers and recommended by the ministry of power that some of the TPPs with tapering linkages could not develop their linked coal blocks as per the prescribed schedule for reasons beyond their control and therefore, coal supplies for such plants should continue, the release said.

The decision will ensure additional coal supplies to these nine units for a period of three years (ie, till 30 September 2016) or for the period that they were affected by the said policy or till such time the production actually starts from the blocks, whichever is earlier.

The coal supply position will be reviewed at the end of the first, second and third year by the ministry of commerce and the ministry of power and the Planning Commission. While the coal quantities admissible under tapering linkage policy will be supplied through FSA, the additional quantities will be supplied on memorandum of understanding (MoU) basis, subject to availability of coal, the CCEA said.

The CCEA had earlier approved coal supplies to thermal power plants with a capacity of 78,000 MW commissioned/ to be commissioned during the period from 1 March 2009 to 31 March 2015.

Domestic coal quantities were decided at 65 per cent, 65 per cent, 67 per cent and 75 per cent during the remaining four years of 12th Plan. To meet the balance obligations, Coal India Ltd (CIL) is to import coal and supply to willing TPPs. The TPPs can also import coal themselves.

A Presidential directive has been issued to CIL accordingly and 157 FSAs for a capacity of 71,145 MW have been signed so far.

The decision will provide a fresh lease to these power projects that ran the risk of running out of fuel supply due to delay in development of their coal mines.