The Indian government is considering revising the coal supply mechanism to benefit only to state electricity distribution companies agreeing to raise tariffs and reduce distribution losses. Under the new mechanism, coal supply contracts would be awarded to state utilities that would distribute it to power generation companies through tariff-based bids: plants committed to supply electricity at the cheapest tariff would win the deal. Indian power distribution companies have accumulated financial losses and are not obliging their existing power purchase agreements (PPAs) or inviting new PPAs with generation companies, prompting power plants to operate under optimal levels.
The Coal Ministry is drafting a policy to auction Coal India contracts to power companies and to provide coal until May 2016 to power plants affected by the cancellation of captive mining licenses. Coal India will earmark 10 Mt of coal through spot auctions for power plants affected by coal shortage and additional auctions of 5 Mt will be conducted for power plants with long and medium-term PPAs and projects with no contracts or short-term power contracts.
Interested in Global Energy Research?
Enerdata's premium online information service provides up-to-date market reports on 110+ countries. The reports include valuable market data and analysis as well as a daily newsfeed, curated by our energy analysts, on the oil, gas, coal and power markets.
This user-friendly tool gives you the essentials about the domestic markets of your concern, including market structure, organisation, actors, projects and business perspectives.