The coal ministry has rejected the power ministry's plea to allow medium- and short-term electricity purchase agreements to secure fuel linkages.
Power purchase agreements (PPA) are contracts between generators of electricity and their buyers that need to be signed before coal supplies can be allotted for projects.
"Coal companies do not recognise medium-term and short-term PPAs for coal supplies. MoP (Ministry of Power) has taken up this issue with MoC (Ministry of Coal) several times with detailed justification for allowing medium-term PPAs for coal supplies," according to an official document.
"However, MOC has not agreed to the issue so far," according to the document.
Long-term PPAs range from seven years to 25 years, medium term PPAs from one to seven years and short-term PPAs are from one month to one year.
Coal India (CIL) tweaked the model fuel supply agreement for new private power plants in April, allowing them to revise the annual contracted quantity once in a quarter by amending or supplementing the PPA if they were able to procure additional long-term power purchases.
Previously, such changes were permitted once in a year and would have become effective from the following quarter, Coal India said in a recent recent letter to its subsidiaries.
The Cabinet Committee on Economic Affairs has approved coal supplies for power projects with a capacity of 78,000 MW for which agreements had to be signed.
"As of now, Coal India has signed 160 fuel supply agreements. There are still some more to be signed," a Coal India official said.
Coal India has missed two deadlines for the signing the fuel supply agreements. The Coal Ministry had set deadlines of August 31, 2013, and September last year.
