The Standard Linkage Committee (SLC) has decided not to extend nomination-based coal linkage supplies to the thermal power plants that are executed under Letter of Assurance (LOA) route beyond 31 March, 2022.
The decision was taken in an attempt to promote transparent allocation via competitive bidding envisaged under SHAKTI policy.
In the previous regime, the power producers with pending LOAs were allowed to sign Fuel Supply Agreement (FSA) for coal supplies after their plants had met the specified conditions. The deadline for this provision was 31 March, 2022, subsequent to which new regime of auction-based linkages was to be enforced.
However, it was observed that some of the plants having LOA contracts were seeking extension to date which made it difficult for state-owned miner Coal India Ltd (CIL) to plan for coal supplies.
The SLC in its findings also highlighted that coal supplies to LOA holders at notified price would put them in an advantageous position in comparison to those power plants who are procure coal through linkage auctions at a premium over notified price while participating in tariff-based bidding.
On these grounds, the committee has cancelled the extension of coal supplies for LOA holders whose FSAs are expiring, instead these plants would now have to secure coal linkages under various auctions marked under SHAKTI policy.
Advancement under SHAKTI regime
In case of power plants without power purchase agreements (PPAs), CIL has been conducting auctions for medium/long term supplies under SHAKTI B(iii) scheme. Over the three rounds of auctions held so far, a total of 18 million tonnes (mnt) coal was sold out of 25.9 mnt offered on sale.
On the other hand, auction for short-term supplies for plants without PPAs are carried out via SHAKTI B (viii-a) scheme on a quarter basis.
Under this provision, ten tranches have been concluded where out of total offered quantity of 52.36 mnt, 18.31 mnt was booked. The eleventh tranche for sale of 6.02 mnt coal is currently underway that will start from 28 November.
The government has also initiated coal allocation under SHAKTI B(iv) for earmarking linkages to states for procuring PPAs.
Under this scheme, the states are directed to carry-out tariff-based bidding to procure power on medium-to-long term basis at affordable rates, in return, the successful bidders would be allocated coal linkages by domestic coal companies for power generation.
At present, coal linkage earmarked to the state of Madhya Pradesh and Gujarat were granted to the extent of power requirement procured through tariff-based bidding.
Meanwhile, slow development has been made with regards to SHAKTI B(v) scheme which also involves coal allocation against tariff-based bidding as the implementation of this provision was delayed in the absence of adequate documentation.
However, making strides against this provision, the nodal agency PFC Limited has recently initiated tender for supply of 4,500 MW power for five years beginning April 2023 on behalf of different utilities.
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