New Delhi: Coal India Limited (CIL) on Thursday announced a significant policy shift, clearing the way for the sale of unrequisitioned surplus (URS) power generated by thermal power plants (TPPs) using its linkage coal under long and medium-term fuel supply agreements (FSAs) in the power market and exchanges, effective August 1.
Previously, TPPs operating under power purchase agreements (PPAs) using CIL’s linkage coal were restricted from selling electricity in the open market. "Earlier, TPPs serving power purchase agreements (PPAs) using CIL’s linkage coal could sell the electricity generated only within the confines of the PPAs as the provisions disallowed the sale of power generated from long and medium-term FSAs in the power market and exchanges," the company said in a statement. For the current fiscal year, CIL has around 650 Million Tonnes (MT) of coal tied up under FSAs in place for the power sector.
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CIL said the move is in line with the spirit of the revised SHAKTI policy. "In the spirit of the revised SHAKTI policy, CIL has done away with the earlier provision of restricting the sale of power in the open market. This applies evenly to all existing as well as future long, and medium-term power FSAs and extends to all the power generators — Central and State Gencos, independent power plants," the company said.
A senior CIL official said the step is part of a broader effort to support reliable and affordable electricity for the power sector. "We have been cementing our relations with consumers consistently and the policy facilitates the power sector to meet consistent demand of affordable power," the official said.
With surplus power from linkage coal now available in exchanges, the company expects this will have a stabilising effect on market prices. "With the surplus power availability in the exchanges, ideally, the spot prices will be in check, leading to affordable power to all," CIL said.
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The announcement follows another major policy change last August, when CIL allowed coal supplies beyond the Annual Contracted Quantity (ACQ) to TPPs across the country, including independent power producers (IPPs). That move eliminated the previous cap of 120 percent of ACQ. "A year ago, in August, CIL paved the way allowing supplies beyond Annual Contracted Quantity (ACQ) to TPPs of the country, including IPPs, doing away with a provision which allowed coal supplies up to a maximum of 120 percent of ACQ," the company noted.
