Tariff discount of power companies may lead to Rs 125 crore savings

New Delhi: The 10 power firms engaged in long-term coal supply contracts have offered tariff discount of up to 4 paise per unit, a move that may result in savings of nearly Rs 125 crore per annum.

Coal India Ltd (CIL) held the bidding on September 11-12 for independent power producers (IPPs) with power purchase agreements (PPAs).

"Out of 14 eligible bidders, 10 participated in the auction, representing a cumulative capacity of approximately 9,044 mw and booked from 8 available sources a cumulative quantity of 27.18 million tonnes per annum, with tariff discounts going up to 4 paise/unit," the coal ministry said in a statement.

The Cabinet had earlier given its go-ahead to the policy for allocation of future coal linkages for the power sector.

"This is expected to result in an annual (power) generation of over 47 billion units per annum from the linkage coal and savings in tariff of approximately Rs 125 crore per annum for up to 25 years," it added.

This policy has been named as Scheme for Harnessing and Allocating Koyala (Coal) Transparently in India (SHAKTI).

"Maximum allocable quantity, which was 39.97 mt (million tonnes), is 80 per cent of the maximum eligible quantity (calculated in terms of weighted average of the source grades) of all the eligible bidders which have submitted the initial public offering (IPO) discount," the statement said.

CIL had invited expression of interest last month. The Central Electricity Authority (CEA) analysed the 31 applications and 14 bidders were found to be eligible.

In another statement, the ministry said 1.2 mt of coal have been despatched to power companies. "The dispatch to the power sector was around 19 per cent more than the same period of September 2016," it said.