Cabinet Committee on Economic Affairs (CCEA)
Posted On:
17 MAY 2017 4:50PM by PIB Delhi
The Cabinet Committee on Economic
Affairs, chaired by the Prime Minister Shri Narendra Modi, has approved the
signing of Fuel Supply Agreement (FSA) with the Letter of Assurance (LoA)
holders. Allocation of linkages for power sector shall be based on auction of
linkages or through Power Purchase Agreement (PPA) based on competitive bidding
of tariffs except for the State and the Central Power Generating companies and
the exceptions provided in Tariff Policy, 2016. Coal drawal will be permitted
against valid Long Term PPAs and to be concluded Medium Term PPAs.
The approved framework ensures that
all projects with linkages are supplied coal as per their entitlement. This
will ensure the rights of coal supplies for FSA holders and signing of FSA with
LoA holders.
Allocation of linkages in future
will be transparent and bidding based, barring some exceptions as per Tariff
Policy. Future allocation/grant of linkages will be based on auction and/or
tariff based bidding. It attempts to make optimal allocation of the vital
natural resource across the power units.
The salient features
of the SHAKTI are as follows:
i.
TPPs having LoA shall be eligible to
sign FSA after ensuring that the plants are commissioned, respective milestones
met, all specified conditions of the LoA fulfilled within specified timeframe
and where nothing adverse is detected against the LoA holders and the TPPs are
commissioned before 31.03.22.
ii.
TPPs, part of 78000 MW, that could not
be commissioned by 31.03.15 shall now be eligible for coal drawal if the plants
are commissioned before 31.03.22.
iii.
Actual coal supplies to all TPPs shall
be to the extent of long term PPAs or medium term PPAs to be concluded in
future.
iv.
Future coal linkages shall be granted as
per the following provisions:
a) To
Central and State Gencos, on recommendations of Ministry of Power (MoP).
b) Coal
linkages shall be granted on auction basis for Independent Power producers
(IPPs) with PPA based on domestic coal. The IPPs participating in auction will
bid for discount on the existing tariff. The discount on tariff would be
adjusted from the gross amount of bill at the time of billing.
c) The
future coal linkages for supply of coal to IPPs without PPA shall be on the
basis of auction where bidding for linkage shall be done over the Notified
Price of Coal Company. The LoA shall be issued to the successful bidders and
FSA signed after meeting the terms of LoA.
d) Linkages
shall be earmarked to the States where any linkage quantity unutilized for two
years shall lapse. States may indicate the earmarked linkages to the
DISCOMs/SDAs, who may:
·
Undertake tariff based competitive
bidding on long-term and medium-term PPAs and allot these linkages to the
successful bidder; or
·
Assign these linkages to capacities that
are covered under exceptions and proviso clauses of para 5.2 of the Tariff
Policy dated 28.01.16.
e) Power
requirement of group of States can be aggregated and procurement of power on
tariff based bidding shall be made by a designated agency. Coal linkages shall
be earmarked for such agency.
f) Linkages,
for full normative quantity, shall be granted for setting up Ultra Mega Power
Projects (UMPP).
g) Coal
linkages, for IPPs having PPA based on imported coal, shall be made available
through a transparent bidding process.
Policy directions will be issued by
the Ministry of Coal and Ministry of Power and will be implemented by CIL (Coal
India Ltd.) / SCCL (Singareni Collieries Company Ltd.) and different power
entities of the State and Central Government.
Background:
The coal supply to the TPPs has
been made as per the provisions of the New Coal Distribution Policy (NCDP),
2007. Till 2010, CIL had issued LoA for approximately 1,08,000 MW capacity and
no new LoAs were issued thereafter due to the prevailing scarcity scenario. The
CCEA decision of 21.06.13 directed CIL to sign FSA with TPPs of about 78,000 MW
capacity. The coal availability scenario has, now, emerged from scarcity to
adequacy. In this adequate coal availability scenario, the present policy
proposes a fading away of the old linkage allocation policy and emergence of a
new linkage allocation policy based on transparent and objective criteria for
the optimal utilisation of the natural resources.
Coal linkage to the power sector is
governed by provisions of the NCDP, 2007. Under the NCDP, a system of issuance
of LoA was introduced wherein requests for Linkage/LoA are forwarded to MoP for
its recommendations. These recommendations are placed before the Standing
Linkage Committee (SLCLT) which authorizes issue of LoA.
POLICY HIGHLIGHTS
I.
Existing Regime
·
FSA to be signed with the existing LoA holders
Ø About 28,000 MW
Ø Plants have to be commissioned within 31.03.2022
Ø Respective milestones are met
Ø All LoA conditions fulfilled in specified time frame
Ø Nothing adverse is detected
·
TPPs which are part of 78000 MW, to get coal if commissioned
within 31.03.2022
·
TPPs to get coal at existing rate (@75% of ACQ)
·
Coal supply to increase on coal availability
II.
New Regime (SHAKTI, 2017)
·
State/Central Gencos & their JVs to get coal linkages as per
MoP recommendations
·
Coal Linkage on auction basis for IPPs:
Ø Having PPA based on Domestic Coal
·
Bid for discount in existing tariff (paise/unit)
·
A minimum discount in tariff to be determined
·
Discount to be adjusted from gross amount at time of billing
Ø Without PPA
·
Bid for linkages over CIL notified price
·
PPA to be submitted within 2 years
Ø Having PPA based on Imported Coal
·
Transparent bidding process of linkages
·
Methodology to be formulated by MoC & MoP
·
Future Medium Term PPAs also to be eligible for linkage coal
·
Coal linkages for full normative quantity of UMPPs on tariff
based competitive bidding
·
Coal linkages to be earmarked to States for
Ø Tariff based competitive bidding for PPA; OR
Ø Grant to capacities covered under exceptions in Tariff Policy
dated 28.01.16, namely,
·
One time capacity addition of up to 100% of existing capacity
·
Plant set up under a notified policy of State Government for
investment promotion (maximum 35% can be procured by State Discom)
Ø State to decide from above two, in public interest and requirement
Ø Linkage quantity unutilised for 2 years to lapse
·
Power requirement of group of States can be aggregated
Ø Linkage to agency designated by MoP/States
Ø Agency to undertake tariff based competitive bidding
III.
Benefits of the Policy
·
Coal available to all Power Plants in transparent and objective
manner
·
Auction to be made the basis of linkage allocations to IPPs;
cheaper and affordable POWER FOR ALL
·
The Stress on account of non-availability of linkages to Power
Sector Projects shall be overcome. Good for the Infrastructure and banking
Sector
·
PPA holders to reduce tariff for linkage; Direct benefit of reduced
tariff to Discom/consumers
***
AKT/VBA/SH