Hit by costs, discoms push for review of policy on linkages

Written by fe Bureau | Updated: Jul 8 2014, 02:53am hrs
As power distribution companies are increasingly avoiding signing long-term contracts for sourcing electricity due to high prices quoted by bidders in the wake of fuel crisis, private generators have asked the government to review its current policy of excluding medium- and short-term power purchase agreements (PPAs) from fuel linkage.

Making linkage coal supply to power projects conditional on long-term PPAs is unworkable because it is discoms, not developers, who decide whether to sign long or short term power supply contracts, a delegation of Association of Power Producers (APP) told power minister Piyush Goyal and sought his intervention to ensure policy change.

The APP delegation also suggested that projects which have been commissioned but yet to sign PPAs should be allowed to supply power on the cost-plus basis instead of going through the bidding route. Under the cost-plus system, tariff is determined by concerned electricity regulator.

It was also suggested by the delegation that the government consider allowing additional flexibilities to generators like swapping of linkage coal with imported coal to reduce transportation costs ( for example, power plants located in coastal areas based on domestic coal and inland generating stations using imported fuel can exchange coal supplies) and transfer ring coal from one to another plant of the same group company.