ICPPA opposes govt move on non-renewal of coal linkages

ICPPA, an association of captive power producers, has opposed Coal Ministry's proposal that linkages provided to them maturing on July 1, 2016, will not be renewed.
"The Indian Captive Power Producers Association (ICPPA) asserts that the recent proposal by the Coal Ministry, which advocates that non-IPP coal linkages maturing prior to July 1, 2016 will not be renewed and post July 1, 2016, all linkages will be terminated," the body said in a statement.
As per the proposals, all (terminated) linkages will be put for auction.
ICPPA said industries fear that the move will severely hurt existing Captive Power Plants (CPPs).

This abrupt change in the policy will make the industry uncompetitive globally and will adversely affect the huge investments made over the last more than two decades, the statement added.
The body said that an investment of Rs 2 lakh crore made in 41,000 MW coal-based CPPs and another Rs 65 lakh crore investment in related industries would be affected by such ad-hoc decisions of Coal Ministry.

Post economic liberalisation, power was considered as the key to industrialisation and captive generation was promoted by persuading industries to divert huge productive funds for setting up CPPs.
At present, the CPPs capacity equates 71 per cent of industrial power consumption and CPP-based industries contribute about 13 per cent of GDP and 14 per cent of employment.

Industries have invested in developing massive infrastructure like laying of railway to linkage off-take points based on the comfort assured by coal linkages. If the linkages are lost, industries will stand to face huge losses for no fault of theirs, it said.
However, the CPPs are discriminated in terms of coal allocation, dispatches, prices and coal quality, though all acts, policies and rules treat all power producers alike, e.G. Electricity Act, 2003 and policies therein, New Coal Distribution Policy 2007, Coal Mines (Special Provision) Act, 2014 etc.
This clearly shows that executive actions are superseding the legislative intent, it said.

ICPPA Secretary Rajiv Agarwal said, "The MMDR Act, 2015 passed by Parliament in the last budget session also mandated the auction route for higher transparency, but it made a decent provision for transition.
"The captive miners were allowed fifteen years and Merchant Miners five years for the transition. It had also given captive miners the right of first refusal. But under the new proposal for coal linkages, the industries barely have anytime left for transition.