Panel asks Jaiswal to permit medium-term PPA for coal linkages

Ministry of Power has recommended to the Ministry of Coal to recognise and permit medium-term PPA for the coal linkage purpose

A Parliamentary panel has suggested to the Coal Ministry to accept Power Ministry's recommendations for permitting medium-term power purchase agreement for coal linkages.

"Ministry of Power has recommended to the Ministry of Coal to recognise and permit medium-term PPA (Power Purchase Agreement) also for the coal linkage purpose.

"I am writing this letter to request you to accept recommendation of Ministry of Power to accept medium-term PPA agreements for coal linkage purpose," Chairman of Parliamentary Standing Committee on Science & Technology and Environment and Forests T Subbarami Reddy said in a letter to Coal Minister Sriprakash Jaiswal.

A power purchase agreement (PPA) is a contract between two parties one who generates electricity for the purpose of sale (the seller) and one who is looking to purchase electricity (the buyer).

Reddy, who is also a Member of Parliament, further said in the letter that "there are apprehensions in the Coal Ministry that in case they accept medium term-PPA for one to five years for coal linkage purpose and in case the medium-term period is over then what will happen to the power projects in future."

He clarified that if any power project has tied up with the state government for medium-term PPA, "again they (power projects) will continue with the state government."

"There will be competitive bidding if there is a heavy shortage power but there will be no problem for counter bids," the letter added.

Reddy further said that in practise it has become impossible to get long-term PPA for most of the power projects since most of the state governments "are not at all calling long-term PPA bids".

Some of the states like Andhra Pradesh, Maharashtra and Tamil Nadu are offering medium term PPA which is one to five years, the letter said.

He also expressed concerns that if the practical problem of not getting long-term PPA is not solved, virtually, "power plants in the country will come to standstill".