UMPPs allowed to use surplus coal for other power projects
The move will substantially boost coal capacity and speed up power projects stuck due of lack of fuel linkages.
By Subhash Narayan & Rajeev Jayaswal, ET Bureau |
NEW DELHI: The government has decided to allow companies executing ultra mega power projects (UMPPs) to use surplus coal from their captive blocks to fuel their other power projects, and could even extend the same benefit to other coal-based power projects, officials in the government told ET.
The move will substantially boost coal capacity and speed up power projects stuck due of lack of fuel linkages. “The government is in favour of giving incentives to power projects if it helps in reducing tariff for consumers and aids faster development of projects. The permission to use surplus coal will start with ultra mega power projects. Later , the policy could be extended to other smaller-sized power projects,” an official of the coal ministry, requesting anonymity, said .
The decision will benefit Anil Dhirubhai Ambani group company Reliance Power, the only company putting up two captive coalbased UMPPs, one each at Sasan and Tilaiya.
So far, the government had only allowed Reliance Power to use surplus coal of Sasan UMPP captive mines for other projects. The recent decision will enable it to use surplus coal of 4,000 mw Tilaiya UMPP for its other projects. The company planned to use excess coal from blocks allotted to Sasan to its other 4,000 mw project at Chitrangi (Madhya Pradesh).
Reliance Power is executing a third UMPP at Krishnapatnam with imported coal. The proposal also brightens the prospects of two other proposed domestic coalbased UMPPs - one each in Orissa and Chhattisgarh.
ADAG spokesperson didn’t respond to an email query of ET. The decision is as per direction of an empowered group of ministers (eGoM) headed by finance minister Pranab Mukherjee, the official said.
The government has agreed to include this clause on using surplus coal for other plants in the bid document for UMPPs. The UMPPs normally require 15-16 million tonnes of coal per annum.
Captive coal mines are currently given to specific end users. The current policy requires surplus coal from such blocks has to be transferred to the nearest Coal India Ltd (CIL) subsidiary at a price determined by the coal controller (at lower than notified price which is already 40-50 % lower than market price).
In a few special cases, however, coal ministry accords permission to for sale of excess coal on a temporary basis. “The move will definitely help in getting competitive bids for future UMPPs as bidders could factor in change in policy in their tariff quotes.
The government, however, should also put in a condition that a certain percentage of power generated from surplus coal would also be sold to beneficiaries of the previous project (state electricity boards or SEBs) at the same tariff quoted for previous project,” said Kuljit Singh, partner, Ernst & Young (E&Y ) said.
The policy on allowing use of surplus coal by power projects has been hotly debated ever since government decided to give permission to Reliance Power to exercise this benefit for its 4000 MW Sasan UMPP.
The move to use coal from captive mines for Sasan to other projects has been legally challenged by Tata Power. The matter is currently pending in Supreme Court.
The move will substantially boost coal capacity and speed up power projects stuck due of lack of fuel linkages. “The government is in favour of giving incentives to power projects if it helps in reducing tariff for consumers and aids faster development of projects. The permission to use surplus coal will start with ultra mega power projects. Later , the policy could be extended to other smaller-sized power projects,” an official of the coal ministry, requesting anonymity, said .
The decision will benefit Anil Dhirubhai Ambani group company Reliance Power, the only company putting up two captive coalbased UMPPs, one each at Sasan and Tilaiya.
So far, the government had only allowed Reliance Power to use surplus coal of Sasan UMPP captive mines for other projects. The recent decision will enable it to use surplus coal of 4,000 mw Tilaiya UMPP for its other projects. The company planned to use excess coal from blocks allotted to Sasan to its other 4,000 mw project at Chitrangi (Madhya Pradesh).
Reliance Power is executing a third UMPP at Krishnapatnam with imported coal. The proposal also brightens the prospects of two other proposed domestic coalbased UMPPs - one each in Orissa and Chhattisgarh.
ADAG spokesperson didn’t respond to an email query of ET. The decision is as per direction of an empowered group of ministers (eGoM) headed by finance minister Pranab Mukherjee, the official said.
ADVERTISEMENT
The government has agreed to include this clause on using surplus coal for other plants in the bid document for UMPPs. The UMPPs normally require 15-16 million tonnes of coal per annum.
Captive coal mines are currently given to specific end users. The current policy requires surplus coal from such blocks has to be transferred to the nearest Coal India Ltd (CIL) subsidiary at a price determined by the coal controller (at lower than notified price which is already 40-50 % lower than market price).
In a few special cases, however, coal ministry accords permission to for sale of excess coal on a temporary basis. “The move will definitely help in getting competitive bids for future UMPPs as bidders could factor in change in policy in their tariff quotes.
The government, however, should also put in a condition that a certain percentage of power generated from surplus coal would also be sold to beneficiaries of the previous project (state electricity boards or SEBs) at the same tariff quoted for previous project,” said Kuljit Singh, partner, Ernst & Young (E&Y ) said.
ADVERTISEMENT
The policy on allowing use of surplus coal by power projects has been hotly debated ever since government decided to give permission to Reliance Power to exercise this benefit for its 4000 MW Sasan UMPP.
The move to use coal from captive mines for Sasan to other projects has been legally challenged by Tata Power. The matter is currently pending in Supreme Court.
Download
The Economic Times Business News App for the Latest News in Business, Sensex, Stock Market Updates & More.
The Economic Times Business News App for the Latest News in Business, Sensex, Stock Market Updates & More.
Download
The Economic Times News App for Quarterly Results, Latest News in ITR, Business, Share Market, Live Sensex News & More.
The Economic Times News App for Quarterly Results, Latest News in ITR, Business, Share Market, Live Sensex News & More.
ADVERTISEMENT
