auctionNew Delhi, Dec 10 (PTI) Nearly three months after coalwas allocated to 10 companies for producing 9,044 MW ofelectricity under a new ambitious scheme, none of the powerproducers has been issued the letter of intent due tobureaucratic hurdles.
The Association of Power Producers, which represents thecompanies that were allocated coal linkages, has written threeletters to Coal Minister Piyush Goyal and Cabinet Secretary PK Sinha since last month on "inordinate delay in issuance ofLetter of Intent (LoI) by Coal India subsidiaries.""Even after nearly three months, there is no clarity asto when LoI will be issued to the successful bidders," theAssociation wrote to Goyal on December 7.
Under the new scheme to provide coal to private powerunits having firm power purchase agreements (PPAs) to supplyelectricity to states at a pre-decided tariff but not havinglong-term coal supply, 27.18 million tonnes per annum of coalwas allocated to the 10 plants through an auction.
Coal India had conducted the auction for independentpower producers with PPAs on September 11-12 where the bidderquoting a higher discount to its existing tariff would get thecoal.
Adani Power, GVK Power, Bajaj Hindustan, GMR and ReliancePower quoted discounts in their power tariff in range of 1-4paise per unit under the Scheme for Harnessing and AllocatingKoyala Transparently in India (SHAKTI).
The 27.18 million tonnes per annum with tariff discountsgoing up to 4 paise per unit was "expected to result in anannual generation of over 47 billion units per annum from thelinkage coal and a savings in tariff of approx Rs 125 croreper annum for period up to 25 years," according to an officialstatement issued on September 15 after the auction.
"In the auction scheme, it was envisaged that LoI will beissued by CIL subsidiaries within 15 days of conclusion ofauction," the Association wrote.
Once LoI was issued, the power producers were to amendthe PPAs within 45 days to reflect the discount they hadquoted in the auction and arrange for approval of theelectricity regulatory commission. Thereafter, Coal India Ltd(CIL) had 30 days to sign Fuel Supply Agreements (FSAs) withthe successful bidders.
"Thus, the coal supply was expected to commence within 90days of conclusion of auction," the Association said addingmost of the power producers who had depended upon this linkageauction now face impossible task of arranging coal suppliesfor immediate operations beyond December 2017.
"The situation is compounded by absence of any SpecialForward e-Auction from CIL subsidiaries in last four months,which was being used by these power producers to source theircoal requirements as a stop gap arrangement till coal linkageauctions was carried out," it wrote.
The 10 plants, it said, will have to "shut down/curtailtheir operations for want of coal from January 2018 onwards,thereby creating more financial stress to its stakeholders andlenders.""Even the distribution companies, which would havebenefited with the discounts discovered through a transparentbidding process under SHAKTI 2017, would now be forced toprocure power at higher prices to bridge shortage of powersupply under the PPAs," the Association said seekingexpeditious issuance of LoIs. PTI ANZMR.
This is unedited, unformatted feed from the Press Trust of India wire.