Private power producers (IPPs) believe the methodology for rationalisation of coal linkages approved by the government earlier this week is unlikely so solve the fuel-related issues they face.
The mechanism designed to enable an optimum allocation of linkages for the IPPs received the nod from the Ministry of Coal two years after the government had approved the flexibility in utilisation of domestic coal in order to lower the transportation cost and in turn reduce power purchase cost for State distribution utilities.
“The underlying objective behind the exercise shall be to reduce the landed cost of coal due to reduction in transportation cost. The savings achieved due to this reduction of landed price of coal are required to be passed on to the Discom/consumer of power,” the Ministry said.
According to Sabyasachi Majumdar, Group Head, Corporate Ratings, ICRA Ltd, for every 100 km reduction in distance travelled for transportation of coal, variable cost of coal-based power generation for linkage-based plant is estimated to decline by about 10-12 paise per unit. Read More