Coal contracts to be linked with power tariff

NEW DELHI: Power companies that undertake to supply electricity at lowest rates to distributors stand to win coal supply contracts from Coal India as the mining major plans a tariff-based bidding mechanism to award all contracts in the future.

Coal India is likely to allot fuel supply contracts to state distribution companies that in turn will call tariff-based competitive bids from companies on the lines of ultra-mega power projects, a government official said. “This will also solve the problem of lack of power purchase agreements to power companies,” he said.

The official clarified that the present contracts of the state-run miner with power companies will not be terminated. A policy to auction Coal India supplies to the companies is underway.

The government has already decided to provide coal to power plants affected due to cancellation of captive mining licences by the Supreme Court till May 2016. Power projects that had temporary coal arrangements with Coal India till their captive coal blocks started operations too will continue to get coal till May next year. Coal India will also earmark 10 million tonnes of coal through spot auction for power plants stressed due to lack of coal.

Separate e-auctions of five million tonnes of coal each will be conducted for power plants with long and medium term power purchase agreements and projects with no contracts or short term power contracts.