In a major relief to power plant developers such as Sterlite Energy, KSK Mahanadi Power, GMR Energy and the Chhattisgarh Power Project, the Government has allowed temporary coal supplies to their projects.

“The Cabinet Committee on Economic Affairs has approved the supply of coal to nine of 24 such units in which the development of the coal block was delayed due to the ‘go-no-go’ policy of the Ministry of Environment & Forests (MoEF) on fuel supply agreement (FSA) basis subject to review or re-adjustment wherever necessary,” Government said in a statement.

The nine units include three units of KSK Mahanadi Power (1,800 mw); two units of GMR in Odisha (700 mw); and two units of Sterlite in Odisha (1,200 mw), sources told Business Line .

These power plants would get coal supplies for three years till September 30, 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.”

This kind of fuel supply, commonly known as tapering linkage, is a mechanism whereby coal is supplied on a temporary basis to power projects that have been allotted to coal blocks but mining of which is yet to commence. Generally, fuel supplies based on the tapering arrangement is provided only for three years (75 per cent in the first year; 50 per cent in the second year and 25 per cent in the third year).

“It has also been proposed that the position would be reviewed at the end of the first, second and third year by the Coal and Power Ministries and the Planning Commission,” the Government statement said. 

Earlier, the CCEA had approved coal supplies to power plants with a capacity of 78,000 MW. There were 24 units with tapering linkages within this capacity.

Others in the queue for tapering linkage include Essar Power, Adani Power, and Gujarat Mineral Development Corporation Ltd, among others.

siddhartha.s@thehindu.co.in

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