The Ministry of Power (MoP) has made amendments to the methodology for coal allotment from state governments to the independent power producers (IPPs) under the scheme of flexibility in utilisation of domestic coal.
This scheme was introduced in 2017 to facilitate state governments by inviting bids for power procurement. The process involves selection of IPPs in a transparent bidding based on reverse auction and transferring coal to them so as to acquire electricity at a lesser cost.
Increase in supply tenure: Earlier, the period of coal supply under this provision was one year which has now been extended to three years in order to provide better visibility to the IPPs.
Reduction in timeline: The ministry has revised the timeline for the bidding process to 37 days.
Timeline for Bid Process
Compensation for shortfall: The ministry has defined responsibility both on part of seller (IPPs) and buyer (state) in case of shortfall in power supply.
Now, both seller and buyer have to pay compensation at 20% of tariff per kilo-watt hour (kWh) for the quantum of shortfall below 80% on monthly basis.
Earlier, there was no such obligation in place for seller but buyer had to pay 10% of tariff.
Benefits
These changes have been implemented in an attempt to ease coal availability at power plants going ahead.
The state governments can avail this facility by transporting their linkage coal to near-by power plants for an extended period, thereby, reducing the burden on the railway network.
At present, combined coal inventory available with Coal India (CIL), Singareni Collieries Company (SCCL) and coal washery plants is assessed in excess of 70 mnt. However, coal supply to the power plants remains inadequate against elevated demand due to logistic challenges amid lesser rake availability.
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