Power Minister RK Singh Outlines Decisions Taken To Boost Power Sector

Singh added that the Cabinet also approved the recommendations of a group of ministers relating to stressed power projects including grant of coal linkage for short-term power purchase agreements.

The recommendations include:

• Grant of coal linkage for short-term power purchase agreements

• Allowing existing coal linkage to be used in case of termination of PPAs due to payment default by distribution companies
• Procurement of bulk power by a nodal agency against pre-declared linkages
• Holding coal linkage auctions at regular intervals
• Determining assured contracted quantity based on efficiency
• Making payment of late payment surcharge mandatory
• Non-cancellation of PPA/Fuel Supply Agreement/Long Term Open Access post National Company Law Tribunal scenario
• Non-cancellation of PPA for non-compliance of COD

At least 50 percent of the coal put up for auction will be devoted to the power sector, said Singh. Power plants currently have 16 days of coal stock with them, he added.

Payment Security Mechanism Not Considered

The high-level empowered committee to revive stressed thermal power plants had recommended a payment security mechanism for independent power producers to ensure timely payments to generators because of their poor financial health.

Singh said that the recommendation was not considered by the cabinet today because the Power Ministry is yet to take the Reserve Bank of India’s approval for the same.

The cabinet has approved measures to promote the hydro power sector, including declaring large hydro power projects as part of non-solar renewable purchase obligation.

Here are the key highlights of the hydro power policy:

1. Large hydro power projects to be declared as renewable energy source (as per existing practice, only hydro power projects less than 25 MW are categorised as renewable energy).
2. HPO as a separate entity within non-solar Renewable Purchase Obligation to cover Large hydro power projects commissioned after notification of these measures
3. Tariff rationalisation measures including providing flexibility to the developers to determine tariff by back loading of tariff after increasing project life to 40 years,  increasing debt repayment period to 18 years and introducing escalating tariff of 2 percent;
4. Budgetary support for funding flood moderation component of hydropower projects on case to case basis; and
5. Budgetary support for funding cost of enabling infrastructure i.e. roads and bridges on case to case basis as per actual, limited to Rs 1.5 crore per MW for up to 200 MW projects and Rs 1.0 crore per MW for above 200 MW projects.

(Source: Press Information Bureau)

Power Minister RK Singh said that the measures announced will make the hydro power sector competitive. Additional funds will be provided separately for development of infrastructure in areas where hydro power project is being set up, Singh added.

Large hydro power projects above 25 MW capacity that are commissioned in the future will be classified as renewable energy source and covered with a purchase obligation for buyers, the Press Information Bureau said in an emailed statement.

The Union Cabinet on Thursday approved recommendations of a group of ministers relating to stressed power projects including grant of coal linkage for short-term power purchase agreements.

The decision was taken by the Cabinet Committee on Economic Affairs.

Briefing reporters, Finance Minister Arun Jaitley said the recommendations approved include grant of coal linkage for short-term power purchase agreements, allowing existing coal linkage to be used in case of termination of PPAs due to payment default by distribution companies and procurement of bulk power by a nodal agency against pre-declared linkages.

Central/state generation companies may act as aggregator of power.

(Source: PTI)