The Cabinet Committee on Economic Affairs (CCEA) in the Government of India has today approved a coal linkage auction policy for the power sector in the country. CCEA has named the new auction policy as ‘Shakti’.
The following are the facets of the auction policy:
1) Power generating companies—state, central and joint-ventures—will get coal linkages as per the recommendations of the Power Ministry.
2) Discounts on the existing tariff for Power Purchase Agreement (PPA) holders without linkage will be given through the bidding process.
3) For projects without PPA, bidding will have to be done for acquisition of linkages at the notified prices, fixed by Coal India Limited (CIL).
4) Companies that bid for the lowest tariff will be assured of coal supply for medium to long term as per their PPAs.
The coal linkage auction will also include the Fuel Supply Agreement (FSA) route, which is cheaper than the coal available through the E-auction process. Notably, the power plants with around 20,000 MW capacity that do not have PPA will also be able to participate in the linkage auction from now on.
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