 "Workers clear a track in a railway coal yard on the outskirts of Ahmedabad")
The Union Cabinet approved a new methodology for awarding domestic coal supply linkages to the thermal power sector. Under the new policy, a state’s coal requirement would be clubbed and assigned to the respective state or state-nominated agencies. The state would, then, award coal linkage according to its need, efficiency and cost of power to the power plants in its territory.
According to senior officials, it would now be in states’ discretion and through a transparent mechanism that coal linkage would be awarded, on demand basis. Business Standard had earlier reported that coal linkage would be put under the purview of state agencies.
The policy also allows coal swaps from inefficient plants to efficient plants and from plants situated away from coal mines to minimise coal transportation costs and thereby cost of power.
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For the central government-owned power plants, coal linkages of individual central generating stations (CGS) would be clubbed and assigned to the company owning the CGS, to enable the efficient coal utilisation amongst end use generating stations.
In case of use of coal in state/ central generating plants, the deciding criteria shall be plant efficiency, coal transportation cost, transmission charges and the overall cost of power. The private-owned independent power plants (IPPs) however would have to bid for the coal linakge. The basis of bidding would be the location of source of coal, quantity of coal, quantum of power, and delivery point for the receipt of power which they would have to indicate upfront.
The government designated the Central Electricity Authority to design and issue methodology for implementation of use of coal assigned to the state(s) in their own generating stations, other state generating stations, CGS and IPPs.
The government stated that the decision was taken to optimise coal usage in the country. “This will result in coal transportation cost reduction as well as savings in energy used for transportation and may also result in removal of congestion of Railways network. This will also be a more environment-friendly arrangement as less coal will be used to produce more power and also the distance for transportation of coal would be optimised.”
The decision comes in wake of mismatch in demand and supply of coal, wherein efficient power plants have shortage of coal while adequate coal available with those running on lower capacity. For the operational 145,000 Mw, the total coal demand met through domestic sources is 737 million tonnes (mt). Close to 30,000 Mw is still awaiting any sort of allocation. Out of this 30,000 Mw, around 12,000 Mw of plants do not have any power purchase agreements for uptake of power.
Adding the demand from the unregulated sector, the coal availability needs to be 919 mt, according to government calculations.
OTHER CABINET DECISIONS
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Approval for adoption of United Nations Fundamental Principles of Official Statistics. The move will pave the way for devising a national policy on official statistics
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Approval to move a resolution in both the houses of Parliament for adoption of the recommendations of the Railway Convention Committee (2014) for 2014-15 and 2015-16
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MoU between RBI and Central Bank of United Arab Emirates on co-operation concerning currency swap pact
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MoU between India and Qatar for promoting bilateral cooperation in the field of IT
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Renewal of pact for scientific and technological cooperation between India and the European Union
