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The recent Cabinet decision on coal cost pass-through should enable quick clearance of at least half the 18 power projects to be considered on Wednesday by a sub-group of the Cabinet Committee on Investment (CCI).
These are projects with a total capacity of 8,890 Mw and include projects of Adani Power and Haldia Energy. Projects of GMR and Lanco are also to be taken up by the new Project Monitoring Group (PMG) set up by the CCI but these have to cross more hurdles, apart from non- availability of coal.
CCI, chaired by the Prime Minister, was formed to hasten clearances for projects above Rs 1,000 crore in size. It has since decided all projects are to be first brought before the PMG. Only those not cleared here would go to CCI.
Eight power projects the government wishes to hasten were examined by the PMG and a sub-group of the environment ministry on Tuesday; they need ecological clearance. The next slot of 18 selected by the power ministry for fast-tracking are coming up tomorrow before a separate sub-group, representing the coal ministry.
These projects have not taken off mainly because fuel supply agreements (FSAs) could not be signed with Coal India, the government’s near-monopoly producer, due to shortage of domestic coal. Absence of an FSA is the main hurdle with 15 of the 18 projects, though six also have land and rehabilitation problems.
The Cabinet Committee on Economic Affairs (CCEA) decision of June 21 should turn the tide in favour of these projects as it would make FSAs possible, a government official said. With the mechanism cleared by CCEA, Coal India is to sign FSAs for a total capacity of 78,000 Mw. So far, the more expensive imported coal was not being used in power plants as there was no decision on who would bear the additional cost of the inputs.
The CCEA decision allows power suppliers to pass on the cost to recipients and also allows state power regulatory boards to decide on the rates at which it would allow its electricity board or power companies to buy coal, an official explained.
Two of the four projects of Adani Power, all in Maharashtra, being taken up tomorrow, are stuck because the FSA is yet to be signed by Coal India. Of the projects being taken up tomorrow and where immediate clearances are expected, six are in Chhattisgarh, two each in Maharashtra and Odisha, and one each in Madhya Pradesh, Tamil Nadu, Punjab, UP and Bengal. These are all projects where the hitch in moving forward (apar from six with some land and rehab issues) is the non-availability of coal and the absence of an FSA. Under the CCEA decision, the power plants can either buy imported coal through CIL or independently.
