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Tata Power plants among those seeking coal linkages without curbs

 

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 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.

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.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.

Referred from business line

 

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