Companies

Adani, Tata Power plants among those seeking coal linkages without curbs

Venkatesh Ganesh Mumbai | Updated on October 21, 2019 Published on October 21, 2019

Coal linkage policy is designed as per guidelines of the Central government for the allocation of coal among thermal power firms   -  P_V_SIVAKUMAR

Allow projects that have not been commissioned to surrender coal linkages, says producers’ body

As many as 16 power plants, including those owned by Adani, Tata Power, Jindal Power and others, with a combined generation capacity of 14,700 MW have sought coal linkages without any usage restriction.

The move would enable the commissioned projects to sell coal in the short term and day-ahead market to atleast meet a part of their debt service liability. Coal is used for power generation but its availability is inadequate and international price is high compared to the domestic price. Inadequate quantity of domestic coal, rising imports and high price for imported coal necessitates government intervention while allocating coal among power producing firms.

The projects include Adani’s Raikheda TPP with a capacity of 1370 MW, which completely requires coal linkages. Similarly, Jindal Power with a capacity of 1000 MW also requires the entire capacity to have coal linkages.

Prayagraj Power Generation Company Ltd (PPGCL), with a capacity of 1980 MW, has coal linkages of 1740 MW and requires 240 MW(for new projects). Prayagraj Power is owned by Tata Power.

Reliable industry sources told BusinessLine that such a proposal was discussed in detail in a recent meeting between the Power Ministry and representatives of power producers. Coal linkage policy is designed as per guidelines of the Central government for the allocation of coal among thermal power firms.

Separately, some projects have not been commissioned but have coal linkages. They would like to surrender their coal linkage subject to the condition that their bank guarantees are returned, the Association of Power Producers said in a note to the Power Ministry. At present they are holding on to the coal linkages due to apprehension of forfeiture of their bank guarantees. A bank guarantee is a financial instalment from a lending institution which ensures that liabilities of a debtor are met.

During the meeting it was felt that at times of coal scarcity, the coal linkages may be surrendered along with return of their bank guarantees without encashment, the note said.

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Published on October 21, 2019
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