Assocham seeks relaxation in long-term PPA norm for coal

Industry body Assocham has sought relaxation in the norm that seeks long-term power purchase agreements (PPA) with distribution companies (discoms) to get coal under fuel supply agreement.

"In the current scenario, CIL's over capacity of coal production and thus removing the cap of long term PPA would be beneficial for them and also help increase the consumption of coal as CIL may get the share of demand of coal by the power plants who have not been able to sign a long term PPA due to paucity of bidding opportunities," Assocham Secretary-General D S Rawat recommended in a letter to coal secretary Anil Swarup.

He, however, did not highlight the number of power plants or the capacity that was suffering from this issue.

Explaining the need for the same, Assocham pointed out that there was no such condition at the time when such projects were conceptualized and investments were made in these power plants.

Assocham blamed the aforesaid retrospective and arbitrary policy changes of the previous government, several plants that have already been commissioned are not in a position to enter into long term PPA with discoms due to paucity of bidding opportunities with them.

The letter also highlights early auction of the pending de-allocated coal blocks that would not only reduce import of coal but will also reduce the financial burden borne by the prior allottees who made huge investments in development of their coal blocks.

Out of the total 204 coal blocks de-allocated by the Supreme Court till date only 74 blocks have been auctioned.

The body also said that a notification of 2015 had created a discriminatory situation, where Coal India subsidiaries could have the advantage of contractual operations in their mines, while others irrespective of whether they were in the government sector or in private sector, were being deprived of such advantage and sought to allow the exemptions to the private sector mining. PTI BSM MD ADI .