Methodology for Linkage Rationalization for Independent Power Producers (IPPs)

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An Inter-Ministerial Task Force (IMTF) was constituted to undertake a comprehensive review of existing coal sources of Independent Power Producers (IPPs) having linkages.

Methodology for Linkage Rationalization for Independent Power Producers (IPPs) 

An Inter-Ministerial Task Force (IMTF) was constituted toundertake a comprehensive review of existing coal sources of Independent Power Producers (IPPs) having linkages and consider the feasibility forrationalization of these sources with a view to optimize transportation cost,given the various technical constraints. The recommendation of the IMTF havebeen approved by the Competent Authority.

Point-wise details :

1.         Coal linkagerationalization shall be an exercise in which the coal linkage of a ThermalPower Plant (TPP) of an Independent Power Producer (IPP) may be transferredfrom one Coal Company to another based on the availability during the fiscaland future coal production plan of the coal company.

2.         Theunderlying objective behind the exercise shall be to reduce the landed cost ofcoal due to reduction in transportation cost. The savings achieved due to thisreduction of landed price of coal are required to be passed on to theDiscom/consumer of power.

3.         This exerciseshall be voluntary on the part of the TPPs. The exercise aims to reduce thedistance by which coal travels, thus, easing up the Railway infrastructure forgainful utilization for other sectors.

4.         The one timeprocess of calling for the requests of the IPP for linkage rationalizationshall be undertaken jointly by CIL, SCCL and CEA in a transparent manner.

5.         This linkagerationalization shall be considered only for IPPs having linkages throughallotment route. The IPPs shall also be stating the Minimum Order Quantity(MOQ) for which the linkage rationalization shall be requested and theirpreferred mode of transportation after the linkage rationalization.

6.     The Fuel Supply Agreement (FSA) of therationalized source from any coal company would be signed/implemented onlyafter the appropriate Electricity Regulatory Commission approves thesupplementary agreement.

7.     Any dispute as and when it arises would beresolved as per the provision of the Arbitration and Conciliation Act.

Implementation strategy and targets :

The proposed rationalization of linkages is transparent,objective and creates a level playing field for IPPs in each domain. Itattempts to make optimal rationalization of the vital natural resources acrossthe power units of IPPs.

Major impact :

The reduced landed price of coal shall lead to savings in costof power generated and shall reduce transportation cost of coal.

The savings achieved due to reduction in the landed price ofcoal shall be passed on to the Discom/consumers of power.

The exercise shall also help in reducing the load on thetransportation infrastructure.

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