Cabinet nod to coal supply for 9 power projects with tapering linkage

Tapering linkages are interim supply arrangement made for power projects where production from linked captive coal blocks is delayed

The Union cabinet today approved coal supplies by state-owned miner Coal India Ltd for nine power plants built on tapering fuel linkages. The projects had been stranded as a result of the environment ministry’s No-Go policy of 2010 that barred mining in critically polluted areas.

Tapering linkages are an interim supply arrangement made for power projects where production from linked captive coal blocks is delayed. The cabinet had earlier this year approved coal supply for 78,000 Mw capacity projects including 24 plants based on tapering linkages.

“The CCEA has approved supply of coal to 9 of such 24 units in which the development of coal block was delayed due to the ‘Go-No-Go’ Policy of the Ministry of Environment and Forests on FSA basis subject to review,” the coal ministry said in a statement, without giving further details.

Also, additional coal will be supplied to these 9 units for a period of three years through September 2016 or for a period equal to the time for which they were affected by the policy.

The power ministry had recommended a few companies with tapering linkages could not develop linked coal blocks for reasons beyond their control and therefore coal supplies for such plants should continue.

Under the revised FSAs for 78,000 Mw capacity, coal supplies were pegged at 65% for the first two years followed by 67% and 75% in the next two years by March 2017.

To meet the balance obligations, Coal India will import coal and supply to companies. The government had issued a Presidential directive to CIL forcing it to sign FSAs. The miner has already signed 157 pacts for a capacity of 71,145 MW.