Such projects are currently required to give additional discount on tariff to get coal linkage at notified price of Coal India Ltd. The aim is to simplify the coal linkage policy, according to people aware of the development.
Under the SHAKTI policy coal linkage is given in two ways – at notified price of coal or at a premium through auction.
State-owned generators get linkage at notified price of Coal India Ltd and Singareni Collieries Company Ltd (SCCL). Private companies having power purchase agreements before May 2017 also got linkage at notified price, but through bidding on discount they can offer against the tariff quoted under those agreements.
The premium under the auction route are over the notified price of Coal India.
Despite these projects shifting to the premium route, they may still stand to benefit as the discount on tariff, quoted by them to get the linkage on notified price, is already higher than the auction premium, according to two persons. The premium has hovered between 0-5% above the notified price on an average, according to one of the persons. Companies may be provided a short term and a long-term window under the auction route, which can also be availed by plants whose power is to be sold on exchanges and ultra mega power projects. The policy, being discussed, is also expected to change the duration of coal block auctions for short term linkage. The government could allow only half yearly auctions for one-year use, instead of quarterly, as per the sources.The long-term linkage window may see annual auctions like earlier, but the end use period for coal is proposed to be two, five, seven and 10 years.
Content Source: economictimes.indiatimes.com