Higher costs may dampen the response from state power utilities to buy coal imported through Coal India, with only less than 10 per cent of the expected 36,000 MW capacity projects likely to secure the fuel from the coal major.

“Out of the 36,000 MW capacity projects for which the government has mandated Coal India to import coal on cost plus basis, less than 10 per cent are willing to import coal through the utility,” said a Power Ministry official.

Coal India has proposed to import coal for the power utilities at cost plus basis wherein the cost of imported fuel in addition to the transportation cost and other taxes will have to be paid by the power firms.

“Around 3,000 MW capacity projects have evinced interest in allowing Coal India to import on their behalf while the remaining are keen to do it themselves as they feel it is an economical proposition,” the official said.

The government, last month, said that the power projects commissioned before 2009 aggregating a capacity of 65,185 MW will get coal at domestic prices, whereas post 2009 projects, with a capacity of 36,000 MW, which have signed Power Purchase Agreements (PPAs) with the procurers, will get the dry fuel at cost plus basis.

Cost plus basis may lead to increase in electricity tariffs if the generation companies pass the rise in cost to the consumers.

The government is yet to finalise the mechanism for securing coal for the 24,000 MW projects which have tariff based linkages, have no PPAs or have tapering linkage.

Tapering Linkage is the short—term linkage which is provided to those coal consumers who have already been allocated captive coal blocks for meeting the coal requirements of their linked end use plants (EUPs).

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