Cabinet postpones decision on coal supply to power projects

The government today deferred a decision on supply of coal to some thermal power projects with tapering linkages beyond the three-year period.

"The proposal for tapering linkage has been postponed," a senior Minister said after the meeting of the Cabinet Committee on Economic Affairs (CCEA) here.

Tapering Linkage is short-term linkage provided to those consumers who have been allocated captive coal blocks but the mines could not be developed on time.

CCEA approval is needed with regard to supply of coal for six power units with tapering linkages, a source has said declining to share the names of the units.

The government had in December approved more coal supply to nine power projects, including those of GMR and Sterlite which failed to develop mines allocated to them due to environment-related hurdles.

The CCEA had earlier approved the supply of coal to nine of such 24 units in which development of coal block was delayed due to the 'Go', 'No-Go' Policy of the Ministry of Environment & Forests on FSA (Fuel Supply Agreement) basis "subject to review/ readjustment wherever necessary".

According the sources, the Cabinet had approved two power projects of Sterlite, two of GMR and two of KSK Mahanadi Power, among others.

While the quantity of fuel admissible under Tapering Linkage Policy will be supplied through Fuel Supply Agreement, the additional quantities are to be supplied on Memorandum of Understanding basis, subject to availability of coal, a statement after the earlier meeting had said.

The position would be reviewed at the end of the first, second and third years by the Coal Ministry along with the Power Ministry and Planning Commission.

The CCEA had earlier approved coal supplies to TPPs with a capacity of 78,000 MW. There are 24 TPPs with tapering linkages within 78,000 MW capacity.

Only the quantities admissible under the tapering linkage policy were approved for such plants.

Subsequently, requests were received from developers, besides recommendations by the Power Ministry, that some TPPs with tapering linkages could not develop their blocks as per the prescribed schedule for reasons beyond their control and therefore fuel supplies for such plants should continue.