The Union Ministry of Coal has issued methodology for allocating coal to power plants not having power purchase agreements (PPAs). Coal India (CIL) and Singareni Collieries Company (SCCL) will earmark coal mines for supply to such power plants, and auctions will be done every quarter.
Earlier, PPA was a prerequisite for getting coal linkage. But the government relaxed norms under SHAKTI, or the Scheme for Harnessing and Allocating Koyala (Coal) Transparently in India.
The Ministry of Power issued methodology for allocation of coal for sale of power through short-term and day-ahead market (DAM) in power exchange. So far, coal was allocated to long-term and medium-term PPA holders. With this, stressed power stations may be revived. Further, this will also enable deepening of power market being traded through power exchange.
The methodology provides that within 45 days (by 16 January 2020), the coal companies, CIL and SCCL, will earmark areas and mines within their subsidiaries that will be allocated for use as per these guidelines and publish the same on their websites indicating the quality of coal (gross calorific value/grade), the quantum of coal available, period for which such coal will be made available and schedule for start of supply of coal.
It also provided that auctions for coal linkage under this methodology will be carried out every quarter to cater to dynamic requirements and demand variations in short-term and day-ahead markets. An annual calendar will be published on coal companies' websites showing the months in which auctions will be held.
The quantity of coal linkage that a plant may bid will be decided as per the heat rate, which will not be more than 2,600 kilocalorie/kW hour for the untied capacity of the plant (for which the PPA is not signed). The Central Electricity Authority (CEA) will call for applications and publish a list of eligible plants, their heat rate and capacity.