Independent Power Producers can now bid for coal allocated to state government-run coal based power plants.
According to a revised methodology for the transfer of coal, state governments will be allowed to divert coal meant for state government-run power plants to private power plants.
The mechanism devised by the Union Ministry of Power creates a provision for tariff-based competitive bidding to enable transfer of coal.
Under the rules finalised by the government on February 20 this year, “The landed cost of power from IPP (Independent Power Producer) generating station at the buyer's periphery should be lower than the variable cost of generation of the state generating station whose power is to be replaced by generation from IPP.”
Power plants will have to take responsibility for the availability of transmission corridor for the quantum of power offered and the period of supply before submitting their price bids during e-reverse bidding. IPP will also have to get a nod form the Ministry of Railways agreeing to the operational feasibility of rail transportation of coal to the project site.