Cabinet approves new coal allocation policy for power sector

The revised framework offers a transparent mechanism to supply coal to power producers; power plants to get adequate supply of fuel at competitive prices.

Published: 18th May 2017 12:35 AM  |   Last Updated: 18th May 2017 06:23 AM   |  A+A-

A coal yard (File photo | Reuters)

By Express News Service

NEW DELHI: The Cabinet Committee on Economic Affairs (CCEA), chaired by Prime Minister Narendra Modi, on Wednesday approved a new, transparent coal allocation policy for the power sector called Shakti or Scheme for Harnessing and Allocating ‘Koyala’ (Coal) Transparently in India-2017.

The CCEA also gave its nod to the signing of fuel supply agreements with power companies, which would eventually help these firms pay back their loans to banks. As of December 2016, bad loans exceeded Rs 6 lakh crore and for the full fiscal FY17, gross NPAs are pegged at around Rs 7.5 lakh crore. Roughly 50 per cent of the bad loans pertain to sectors like infrastructure, power, roads, and telecom companies.

“Shakti will help the sector and promote competition, the provisions in the scheme will also ensure that power companies can operate in a true open market environment, which should help in repayment of huge loans,” said S K Chowdhary, former CMD of Coal India Ltd.

“The approved framework ensures that all projects with linkages are supplied coal as per their entitlement,” said a government release. Allocation of linkages for the sector shall be based on auction of linkages or through power purchase agreement based on competitive bidding of tariffs except for the state and the central power generating firms.

“The new FSA allocation policy introduces transparency in the allocation of linkage coal to independent power producers. This will eliminate the current tedious process and dependence on linkage committee. It also provides some assurance to stranded assets without FSAs. One of the biggest beneficiaries will be thermal power plants with imported coal-based PPAs. This will help them migrate to domestic coal, reducing their exposure to price vagaries of imported coal,” said Abhishek Poddar, partner and head, energy and process industries, A T Kearney India.

Allocation of linkages in future will be transparent and bidding-based, barring some exceptions as per tariff Policy.

CCEA gives nod for several road, railway projects

NEW DELHI: The Cabinet Committee on Economic Affairs (CCEA) chaired by the Prime Minister Narendra Modi approved a slew of railways and road-related projects. It has approved the construction of double line with electrification between Guntur-Guntakal in Andhra Pradesh. The total length of the line will be 401.47 km and the estimated cost of the project is H3,631 crore which will be funded through cost sharing of 50:50 by the state government and the railway ministry.

The CCEA also cleared the construction of the 160-km electrified third line between Manmad and Jalgaon in Maharashtra at an estimated cost of H1,035.16 crore. In a bid to boost discovery research for biopharmaceuticals and boost industry-academia work, CCEA gave its nod to “Innovate in India  empowering biotech entrepreneurs and accelerating inclusive innovation”.

The H1,500 crore project will run for five years with 50 per cent cost for the Mission Programme from World Bank loan and rest by the government.

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