Methodology for Linkage Rationalization for Independent Power Producers (IPPs)

An Inter-Ministerial Task Force (IMTF) was constituted to undertake a comprehensive review of existing coal sources of Independent Power Producers (IPPs) having linkages and consider the feasibility for rationalization of these sources with a view to optimize transportation cost, given the various technical constraints. The recommendation of the IMTF have been approved by the Competent Authority.

Point-wise details :

1. Coal linkage rationalization shall be an exercise in which the coal linkage of a Thermal Power Plant (TPP) of an Independent Power Producer (IPP) may be transferred from one Coal Company to another based on the availability during the fiscal and future coal production plan of the coal company.

2. The underlying objective behind the exercise shall be to reduce the landed cost of coal due to reduction in transportation cost. The savings achieved due to this reduction of landed price of coal are required to be passed on to the Discom/consumer of power.

3. This exercise shall be voluntary on the part of the TPPs. The exercise aims to reduce the distance by which coal travels, thus, easing up the Railway infrastructure for gainful utilization for other sectors.

4. The one time process of calling for the requests of the IPP for linkage rationalization shall be undertaken jointly by CIL, SCCL and CEA in a transparent manner.

5. This linkage rationalization shall be considered only for IPPs having linkages through allotment route. The IPPs shall also be stating the Minimum Order Quantity (MOQ) for which the linkage rationalization shall be requested and their preferred mode of transportation after the linkage rationalization.

6. The Fuel Supply Agreement (FSA) of the rationalized source from any coal company would be signed/implemented only after the appropriate Electricity Regulatory Commission approves the supplementary agreement.

7. Any dispute as and when it arises would be resolved as per the provision of the Arbitration and Conciliation Act.

Implementation strategy and targets :

The proposed rationalization of linkages is transparent, objective and creates a level playing field for IPPs in each domain. It attempts to make optimal rationalization of the vital natural resources across the power units of IPPs.

Major impact :

The reduced landed price of coal shall lead to savings in cost of power generated and shall reduce transportation cost of coal.

The savings achieved due to reduction in the landed price of coal shall be passed on to the Discom/consumers of power.

The exercise shall also help in reducing the load on the transportation infrastructure.

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