Coal linkage for 5 power firms spiked

Coal crunch hits cement plants too.

In a move that could affect five coal-based independent power producers and the expansion plans of 10 cement units, the government, citing shortage, has refused coal linkage to these projects.

The companies affected are Sterlite Optical Technology, which is setting up a 5x500 mw thermal power station, Cipco's 500 mw Bhadravati Thermal Power, the two phases of 2x300 mw each of the Aditya Power Project, Ind Bharat Energy's 250 mw thermal power plant and KVK Neelanchal Power's 250 mw thermal power station.

Officials said these companies had approached the government for fresh allocation of a total of 25 million tonnes of coal for projects coming up in various parts of the country. "Financial closure for new thermal power projects is not possible unless the fuel linkage is finalised by the promoters," said an official.

Among the cement companies that were refused enhancement of supplies are JP Concrete, Vishnu Cement, Gujarat Ambuja, Zuari Cement, India Cement, L&T Cement, Maratha Cement Works, Aditya Cement, Birla Cement Works and Orient Cement.

Officials said the department of coal, at a recent meeting of the standing linkage committee (long-term), also asked the power ministry to reprioritise power projects in accordance with the preparedness for thermal power stations, scheduling and the promoters' background.

The department has sought clarifications in cases of enhancement of allocation. "We want to know whether the enhanced allocation is for replacement of imports and if it is so then we are at present not in a position to accommodate them," said an official.

The linkage committee, which met after a gap of over a year, asked the ministry of power and department of industrial policy and promotion to recommend coal linkage only after a detailed scrutiny, keeping in view the promoters' background, seriousness and preparedness.

The committee allotted long-term linkage of 16.26 million tonnes a year for power plants while serving notices to 16 thermal power plants for inadequate progress in project execution.

Officials said such linkage was pre-empting linkage to other deserving users. Cancellation of linkage to these plants will release about 60 million tonnes of coal. "The notice for cancellation has been sent despite the fact that Coal India was able to meet about 90 per cent of linkage for the existing plant," said an executive with a company that had sought coal linkage.

The plants sanctioned long-term linkage are National Thermal Power Corporation's power station in Nagpur and its super thermal power station (stage III) in Farakka, the Andhra Pradesh Generation Company's Bhupalapally plant, and the Maharashtra State Electricity Board's Parli (stage II) and Paras plants.

Besides, there are 25 captive power plants, accounting for a total capacity of 647.56 mw, which have long-term linkage.