But coal linkage under the scheme has lifted utilisation, slashed fuel cost for power plants
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Ten power plants won coal linkages totalling 27.18 mtpa for 25 years in the first round of auctions under Scheme for Harnessing and Allocation of Koyala (Coal) Transparently in India (SHAKTI), with discounts of 1-4 paisa/kWh on existing tariffs
Between April and August this year, fuel cost of these plants dropped ~37% as linkage supply rose ~49% on-year, while e-auction and import procurements fell ~70% and ~84% on-year, respectively
The average generation cost for all the plants under SHAKTI declined ~38% to Rs 1.87 per kWh, compared with Rs 3.03 per kWh in April-August 2017
For distribution companies, this means savings in power-purchase costs – the benefit would be higher for cost-plus power-purchase agreements
Of the five stressed assets which have coal linkage under SHAKTI, one (Adani Tiroda) is out of stress already. Improvement in operational performance of other plants is expected to unlock better value for stakeholders and expedite the resolution process
Faster implementation of SHAKTI-II is expected to partially assist the resolution of an estimated 2.6 GW of untied stressed-power capacity