Power projects of 30,000 MW capacity that are staring at termination of coal supply linkage after missing key implementation milestones may get a breather.
The coal ministry has decided against using penal provisions against these developers on a unilateral basis.
The ministry has taken the view that the issue be left to the long-term fuel linkage committee to resolve. The committee, which includes representatives from all ministries concerned, is expected to meet shortly. The ministry has asked Coal India in a recent letter to ensure that its subsidiaries do not invoke their powers to cancel Letters of Assurance (LoAs) issued to these projects and wait for the outcome of the next meeting of the standing committee on long term coal linkage.
“As the review meeting of the committee on long-term fuel linkage is likely to take place shortly, I would request you to advise the local companies (CIL subsidiaries) not to take any action which could prove detrimental to the project developers and await the deliberations of the committee in this regard,” a senior coal official has written to CIL chairman NC Jha recently.
It was decided in the meeting of the standing committee on long-term coal linkage on November 15, 2008, that LoAs issued to power projects for fuel supply would be liable for cancellation if developers fail to commission their projects in 24 months' time. The clause was inserted in the model LoA following the power ministry's suggestion.
As per the key milestones incorporated in the LoA, developers are required to secure environmental clearance and achieve financial closure withing six months from the issuance of LoA. Further, they have to acquire 90% of land for the project in 12 months.
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