Calcutta, Sept. 13: Coal India will allocate 27.18 million tonnes every year to power producers who have participated in its first auction under the Centre's fuel linkage distribution scheme called Shakti (Scheme for Harnessing and Allocating Koyla Transparently in India).
Before the Shakti scheme, coal to the power sector was governed by the provisions of National Coal Distribution Policy, where letter of assurances were issued by the Centre's standing linkage committee to the generating companies based on the recommendations of the power ministry. Accordingly, fuel supply agreements were signed between Coal India and the power generators.
The Shakti scheme replaces the regime of letter of assurances and fuel supply agreements with the long-term auction of coal linkages.
Following cabinet approval in May, Coal India had invited expression of interests from independent power producers having power purchase agreements by August 19, 2017.
CIL sources said 31 applications were received which were scrutinised by the Central Electricity Authority and among them, 14 bidders were found eligible.
Subsequently, the public sector miner conducted the auction on September 11-12. Among the eligible bidders, 10 power producers participated with a cumulative generation capacity of 9000 MW to draw coal from eight available sources.
Under the auction scheme, independent power producers bid for a discount on their existing tariffs, which is intended to lower the costs for those consumers who are sourcing power from these entities.
The scheme also offered bidders quoting higher discount to the existing tariff, the priority on the source from where it would like to receive coal. At this round of linkage auction, power producers who participated offered to reduce their tariffs by 4 paise per unit on the higher side and 1 paise per unit on the lower side. At least 21.5 per cent of the total coal on offer amounting to 6 million tonnes per year would be allocated to the bids where discount on tariff were 4 paise per unit.