Lok Sabha Question No. 1873 (UNSTARRED), answered on 2017-07-27
Subject: Transparent Mechanism for Coal Allocations
Ministry: COAL
Asked by: NAGARAJAN P.

## GOVERNMENT OF INDIA MINISTRY OF COAL LOK SABHA UNSTARRED QUESTION NO.1873

## TO BE ANSWERED ON 27.7.2017

## Transparent Mechanism for Coal Allocations

## 1873. SHRI P. NAGARAJAN:

Will the Minister of COAL be pleased to state:

- (a) whether the Union Government has approved a transparent mechanism for coal allocations, securing supplies of the fuel for stranded power projects in the country;
- (b) if so, the details thereof; and
- (c) the salient features of the transparent mechanism for the said purpose?

## A N S W E R

## MINISTER  OF  STATE  (I/C)  IN  THE  MINISTRY  OF  COAL,  POWER,  NEW  AND RENEWABLE ENERGY AND MINES

- (a), (b) & (c) : A policy on 'Signing of Fuel Supply Agreements (FSA) with Letter of Assurance  (LoA)  holders  of  Thermal  Power  Plants  (TPPs)  -  Fading  Away  of  the existing  LoA-FSA  Regime  and  Introduction  of  a  New  More  Transparent  Coal Allocation Policy for Power Sector, 2017 - SHAKTI (Scheme for Harnessing the and Allocating  Koyala  (Coal)  Transparently  in  India)'  has  been  issued  on  22.05.2017. The salient features of the policy are:
- (i)FSA shall be signed with the pending LoA holders after ensuring that the plants are  commissioned, respective milestones met, all  specified  conditions of  the  LoA fulfilled  within  specified  timeframe and where nothing adverse is detected against the LoA holders. The outer time limit is 31.03.2022.
- (ii) Medium Term PPAs, to be concluded after the issue of this policy, shall also be eligible for linkage coal.
- (iii)  New  linkages  to  State/Central  Gencos  or  their  Joint  Ventures  (JVs)  shall  be based on recommendation of Ministry of Power.
- (iv)  Coal  linkages  shall  be  granted  on  notified  price  to  Independent  Power Producers  (IPPs)  having  already  concluded  long  term  PPA,  where  IPPs  shall participate in auction and bid for discount on the tariff.
- (v) Coal linkages to IPPs without PPAs shall be through an auction process and the IPPs shall bid on premium above notified price.

(vi)  Coal  linkages  also  earmarked for fresh PPAs by the States. The States may undertake tariff based bidding for long term or medium procurement of power. The States  may  also  grant  these  linkages  to  capacities  covered  under  exception  and proviso clause of para 5.2 of the Tariff Policy of 28.02.2016.

(vii) Power requirement of group of States can be aggregated and procurement of such power can be made by a designated agency. Coal linkages to the designated agency shall be provided based on recommendations of Ministry of Power.

(viii)  Coal  linkages  for  full  normative  quantity  shall  be  considered  for  Ultra  Mega Power Projects (UMPPs), based on recommendations of Ministry of Power.

(ix)  Coal  linkages  shall  also  be  made  available  for  IPPs  having  PPA  based  on imported  coal.  This  shall  be  subject  to  availability  of  coal  and  subject  to  the condition  that  such  supply  does  not  adversely  impact  the  availability  of  coal  for plants based on domestic coal.

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