Following new mechanism, Coal India will offer coal distribution contracts to state owned discoms, which will further distribute it to power producer.
In order to provide electricity at low tariffs, government is planning to introduce a new mechanism for coal supply to power generators. According to the new mechanism, State distribution companies will sign contract with CIL. Further these state owned discoms will distribute coal to power producers, who’ll have to bid for low tariff through reverse auction. Firstly, this will help lowering the electricity tariff in respective states and secondly, it will help to resuscitate the financial status of sick state owned discoms.
The above plan is still on papers and may take time to come in effect. However, there is no sign of termination of previous contact between power producers and CIL.
It should be noted that the Centre in June’15 has presented a model of pricing coal available for sale in auction for non-regulated sectors, to provide a rational price policy for all participants. Earlier, coal ministry used to offer the fuel through coal linkage on nomination basis to non-regulated sectors but determining the final prices for coal auction was not organized.
With this development, the Centre has also come up with a plan to ensure coal availability for medium and small scale enterprises. According to new release by PIB, a total of 3 MnT of coal will be provided annually to this sector through agencies nominated by the respective state government.
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