All Power Projects Entitled To Guarantee On Coal Linkage

All thermal power plants will henceforth get a guarantee on coal supplies, obviating the need for them to make elaborate arrangements to ensure safe and timely supplies.

The concession to all power plants follows the decision taken at a cabinet meeting on Saturday which approved the modifications in the 1040 mw Visakhapatnam thermal power project being set up by the Hindujas.

As a result, the coal companies will provide supplies to power utilities at the place of disembarkation.

At present, all thermal power plants have to pick up coal at the mines and then make arrangements for its transportation.

In doing this, they run the major risk of theft on the way and also delays as coal is mostly carried by rail.

The proposal before the cabinet on coal transport responsibility was only for the Hindujas' project.

However, the cabinet debated the issue and came to the conclusion that the Hindujas should not be given the special privilege of securing coal at the place of disembarkation.

The fuel linkage issue had become a major stumbling block to the progress of the Hinduja project.

The company wanted the supply of 2 million tonnes of specified category coal from Coal India Ltd with a guarantee of delivery.

It had rejected the government's offer to allow it to import coal which would have been costlier.

It was argued at the cabinet meeting that if the Hindujas were given a special facility, others would be disadvantaged, including the public sector power companies.

Finally, it was decided coal should be applied to all power companies at the place of disembarkation.

Although the cabinet gave an in-principle clearance to the Hinduja project, the formal clearance would come only at the next meeting when a suitable amendment is inserted in the cabinet note. The cabinet note was based on recommendations of a committee headed by cabinet secretary Satish Chandran.

The committee had also recommended the setting up of an empowered committee to oversee the construction of a coal washery for the project.

The proposed committee, consisting of members from the coal ministry, Coal India Ltd and Mahanadi Coalfields Ltd will be entrusted with the task of inviting bids from private companies for setting up the washery.

The cabinet also decided to ensure protection of income-tax on ceiling rates of return on equity and incentive besides payment of grossed up tax so that actual tax was fully reimbursed.

The reimbursement of income tax on foreign exchange variations would also be allowed for the Bhadravati project in Maharashtra promoted by the Central India Power Company owned by the Mittals.