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CIL needs to raise supply by at least 8pct to meet group of ministers' plan - ICRA

Coal News - Published on Tue, 12 Mar 2019

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Bloomberg Quint reported that Coal India Ltd needs to ramp up its output by at least 8 percent from the present levels if the group of ministers’ recommendations on allowing domestic coal linkage for short-term power purchase agreements are to be met. The Cabinet Committee on Economic Affairs had on Thursday approved the group of ministers’ recommendations on stressed power projects which include allowing domestic coal supplies to short-term power purchase agreements and increase coal supplies for special forward e-auction for the power sector.

ICRA said that “The measures approved such as allowing the use of domestic linkage coal for short-term power purchase agreements and procurement of bulk power by nodal agencies against pre-declared linkages are a positive for thermal independent power producers, given that coal-based operational capacities of 15-16 gigawatt do not have long-term power purchase agreements.”

It said the use of domestic coal will enable generators to offer more competitive tariffs for shortterm sale, which is also likely to benefit distributing companies given that they purchase larger volumes through short-term power purchase pacts.

It added that “While the CCEA has recommended regular auction of coal linkages and increase in quantity of coal for special forward e-auction, this would require significant ramping up of production and supplies by Coal India. But for this to happen, increase in output would have to be at least 8 percent up from the present levels under the assumption of 16 GW capacity operating at 50 percent plant load factor under the short-term/medium-term power purchase agreements.”

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Posted By : Rabi Wangkhem on Tue, 12 Mar 2019
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