Coal mines may be allocated to states signing up for UDAY

In a bid to incentivise state governments to sign up for its new discom financial restructuring package, UDAY, the government will soon frame guidelines to allocate captive coal mines and coal supply linkages to states, which sign up for the package, instead of companies.

In a bid to incentivise state governments to sign up for its new discom financial restructuring package, UDAY, the government will soon frame guidelines to allocate captive coal mines and coal supply linkages to states, which sign up for the package, instead of companies.

The new system could mean that states signing up for the restructuring deal may be allocated coal blocks for captive use and linkages that they could in-turn auction to power generators, thus bringing down the cost of generation of power. (HT Photo)

The states could then auction the mines and coal supply linkages to companies. A coal supply linkage is an agreement which ensures that a power plant gets the coal it requires for generating power.

“We are considering whether linkages of inefficient (power) plants could be diverted to efficient plants so that more electricity could be generated from the same quantity of coal,” coal secretary Anil Swarup said. “And this would be a part of the UDAY (discom debt restructuring package) that has been announced,” he added.

The new system could mean that states signing up for the restructuring deal may be allocated coal blocks for captive use and linkages that they could in-turn auction to power generators, thus bringing down the cost of generation of power. The specifics of the plan have however not yet been worked out.

The coal blocks to be put under the hammer two each in Madhya Pradesh, Jharkhand, Maharashtra and West Bengal.

These mines together have reserves totaling 1,143.42 million tonnes (mT) and their peak rated capacity stands at 12.86 mT.

So far, the government has auctioned or allocated 34 coal blocks for captive use.