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Sunday, Nov 28, 2004

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Coal Ministry to issue show-cause notices to 16 power projects for tardy progress

Ambarish Mukherjee

New Delhi , Nov. 27

THE Standing Linkage Committee of the Ministry of Coal has decided to cancel the long-term coal linkages given to 16 upcoming thermal power plants because of "inadequate progress" in their execution.

To start with, the committee has decided to issue show-cause notices to the 16 plants as to why their coal linkage should not be cancelled on account of inadequate progress.

Most of these power plants are being set up by various State Governments while a few are NTPC plants. Together, they account for a capacity of 14,300 MW and have been provided a total linkage for 34.36 million tonnes of coal annually.

According to sources, the linkages to these plants were given about four years ago but since none of these projects have come up as per schedule, the coal allocated to them is not being lifted.

Simultaneously, the Ministry has received applications from a large number of private power producers for immediate linkages.

The Ministry of Coal has written to the Ministry of Power seeking details of the present status of these 16 projects. It has also sought the Power Ministry's opinion as to why linkages should not be cancelled on grounds that the projects are not progressing while others are awaiting coal linkage.

Coal Ministry officials noted that notices would be issued to the respective power project authorities after receiving the Power Ministry's reply.

Sources also indicated that if the Power Ministry was unable to stop the Coal Ministry from going ahead with its plans of terminating the linkages from Coal India's subsidiary companies, work in the 16 power plants would be in complete jeopardy. This is because confirmed coal linkage is an essential pre-condition for financial closure of these projects. If the linkage is terminated suddenly, the institutional investors may backtrack on their commitments and that would spell disaster for these projects.

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