The recent decision of the Cabinet Committee on Economic Affairs (CCEA) to allow power projects to pass on the cost of expensive imported coal to recipients would enable quick clearance of at least nine of the 18 power projects which are coming up on 03-07-2013 for the consideration of a sub group of the Cabinet Committee on Investment.
These are projects with a total capacity of 8,890 mw and include projects of Adani Power, and Haldia. Projects belonging to GMR and Lanco are also to be taken up by the new project monitoring group set up by the CCI on July 3 but these have to cross more hurdles besides non availability of coal.
The CCI which was formed to fast track projects above Rs 1,000 crore has finetuned its speed mechanism by setting up a new project monitoring group. All the projects which are stuck for clearance are to be brought before the PMG. Only those projects which are not cleared at the level of PMG would now go to the CCI.
A set of eight power projects which the Government wants to fast track were examined by the PMG and a sub group of the Ministry of Environment today. These were projects awaiting green clearances.
The next slot of 18 power projects selected by the power ministry for fast tracking are coming up tomorrow before a separate sub group representing the coal ministry.
These are projects which have not taken off mainly because fuel supply agreements could not be signed by Coal India as there was shortage of domestic coal. Absence of FSA is the main hurdle in the case of 15 out of 18 projects, though six of them also have land and rehabilitation related problems.
The CCEA decision of June 21 would now turn the tide in favour of these projects as it would make FSAs possible, a government official said. As per the mechanism cleared by the CCEA for supply of coal to power producers CIL is to sign Fuel Supply Agreements for a total capacity of 78,000 MW. So far the more expensive imported coal was not being used in power plants as there was no decision on who would bear the additional cost of the inputs.
The CCEA decision allows power suppliers to pass on the cost to recipients and also allows the state power regulatory boards to take a call on the rates on which it would allow its electricity board or power companies to buy coal, an official explained.Two of the four projects of Adani Power for instance, all in Maharashtra which are being taken up tomorrow by the special cell of the CCI are stuck because FSA is yet to be signed by Coal India.
Of the projects being taken up tomorrow for fast tracking, and where immediate clearances are expected six of them are in Chattisgarh, one in Madhya Pradesh, two in Maharashtra, two in Orissa, one in Tamil Nadu, one in Punjab, one in Uttar Pradesh, and one in Bengal.
These are all projects where the only hitch in moving forward is the non availability of coal and the absence of a Fuel supply agreement. Under the CCEA decision the power plants can either buy imported coal through CIL or independently.
Source- Business Standard