Power companies that undertake to supply electricity at the lowest rates to distributors stand to win coal supply contracts from Coal India as the mining major plans a tariff-based bidding mechanism to award future contracts. Coal India is likely to allot fuel supply contracts to state distribution companies that in turn will call tariff-based competitive bids from companies on the lines of ultra-mega power projects, a government official said. ¨This will also solve the problem of lack of power purchase agreements to power companies,¨ he added.
The official clarified that the present contracts of the state-run miner with power companies will not be terminated. A policy to auction Coal India supplies to the companies is underway. The government has already decided to provide coal till May 2016, to plants affected by cancellation of captive mining licences.
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