The power ministry has approved a methodology to compensate power producers for any short supply of coal. The move follows the Cabinet Committee on Economic Affairs’s (CCEA’s) decision in March to help power producers who are essentially facing a shortage of raw material supplies for reasons beyond their control. The CCEA approval was based on the recommendations of a group of ministers and a high-level empowered committee on stressed power assets.

Even after making advance payments, power plants were not compensated for short supply of coal even if it was due to the fault of Coal India or the railways. The CCEA had clarified that in case of such shortfalls, the supply contract may not lapse and be carried over for up to a maximum of three months.

“Indian Railways and coal companies shall frame/revise the operational guidelines immediately to implement the above recommendations,” the power ministry’s latest note said. Though the government approved a slew of measures to address the distress of independent power producers just before the Lok Sabha elections, the industry is still awaiting the power ministry to formulate more concrete and viable plans and procedures, in sync with the spirit of the CCEA decisions, to help power producers.