Coal India Limited Fuel Supply Agreement

One of the main problems facing the distribution sector is the poor credit rating of utilities and their persistent or significant delays in payments to producers under EPAs. Distribution companies have borrowed to finance losses in their businesses and face great obstacles to repaying their debts. The government created the Ujwal Discom Assurance Yojana Scheme (UDAY Scheme) to improve the operational and financial efficiency of public services. One of the main features of the UDAY programme is the obligation for participating states to assume 75% of distributors` debt through a two-year grant. These states can then issue liquidity ratio bonds not imposed by law, including government development credit bonds to be underwrited by pension funds, insurance companies and other institutional investors. Under the UDAY program, lenders and financial institutions do not charge advance fees on the distributor`s debt and waive unpaid interest, including penalties. To finance future losses and working capital of utility companies, Länder governments will gradually support and finance future losses until the 2020-2021 financial year. One of the most popular aspects of the UDAY programme is its greater acceptance by the respective national governments, given that the debts proposed to borrow do not affect their budget deficit and, in turn, do not affect their budget allocation by the central government. This, in turn, should lead the distribution networks to significantly increase their electricity supply, which is limited by their difficult financial situation. However, the UDAY programme has been criticised by some parties for the lack of explicit support from the central government under the transitional financing mechanisms or operational controls on automatic adjustments to fuel and electricity consumption prices. To date, 27 states and five Union Territories have signed up for the UDAY programme.

In order to address the multiple concerns of all parties involved, the Ministry of Energy published in 2013 revised tendering guidelines and standard tender documents that provide for two types of tendering and electricity supply (the Revised Standard Tender Documents (SBDs): in addition to the long-term guidelines for electricity supply, the Ministry of Energy has adopted guidelines (and revised standard tender documents) for financing the supply of electricity is mandatory (i.e. from one year to five years) of electricity produced from coal, gas or hydroelectric power plants on a financing, self-sufficiency and operating basis, as well as distributors and distributors of distribution licences that have concluded back-to-back agreements with producers electricity. . . .

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