Coal Ministry May Revisit Policy on Tapering Linkages: Report

New Delhi: The Coal Ministry is likely to revisit the policy on tapering linkages which may be done after the apex court gives its judgement on the coal mines issue.

Tapering linkages are interim supply arrangement made for power projects where production from linked captive coal blocks is delayed.

The Coal Ministry "may revisit the tapering linkage policy", a source close to the development said, adding, "However, this may be done after Supreme Court has given its judgement on the case relating to coal block allocations."

The source further said that basic principle behind providing tapering linkage includes incentivising faster production of coal from mines.

Under the current tapering linkage policy, 75 per cent of the normative quantity is supplied to the end-use plant in the first year; 50 per cent in the second year, and 25 per cent in the third year. No supplies are allowed after the third year.

The development follows the Power Ministry earlier asking the Coal Ministry to re-examine the policy on tapering linkage so that the plants whose captive coal block could not come into production may get the tapering linkage as per the entitlement unless the delay is due to factors attributed to the project developers, after which the coal supplies may be tapered as per the extant policy, the source said

The Power Ministry was of a view that currently a majority of the captive coal blocks have not come into production due to various reasons beyond the control of developers but the liked power plants have come into production or are likely to come into production shortly, the source said.

However, as per the current policy, the Power Ministry said that existing tapering linkage holders are unable to get sufficient coal due to the fact that the normative date of production is over, but their coal block has not come into actual production. These projects may be getting stranded possibly for no fault of the developers, the source added.

The Supreme Court had on August 25 held that all coal block allocations made since 1993 till 2010 before pre-auction era during previous NDA and UPA regimes have been done in an illegal manner by an "ad-hoc and casual" approach "without application of mind".

However, the consequences arising from the verdict of such coal blocks will be considered after further hearing by the apex court.