Coal news and updates

Coal linkage rationalisation completed for 16 units

Consumers of power in at least 5-6 states in India are set to get at least some benefits in the form of lower tariffs in the coming days, following the rationalisation of coal linkages of at least 15-16 power utilities in recent months, a senior official from Coal India Ltd (CIL) said.

“The rationalisation of coal linkages has already happened in the case of nearly 15-16 units. These are mainly state power generation companies spread across 5-6 states,” the official said.

The official, however, could not immediately recall the names of such plants and the states.

Under the linkage rationalisation scheme, coal linkages of some power plants have been swapped with others wherein a plant which was earlier getting coal from a mine at a distance of say 800 kilometres has become eligible to get coal from another mine which is much nearer to the plant.

In some cases, a power plant has been asked to use imported coal because of its nearness to a port (say 100-200 km) instead of drawing fuel from a mine which is at a distance of say 800 km.

While on one hand, such a plant will use imported coal, the accrued coal will be given to another plant which was till now using imported coal and paying a huge cost on freight as it was located at a distance from the port.

“Because of rationalisation of linkages, the freight cost for carrying coal from mines to power plants has come down significantly and the regulator will definitely consider this while fixing tariffs in future,” the official added.

The official said that linkage rationalisation will benefit power consumers in those 5-6 states. For example, if the freight rate has come down to Rs 400 per ton from the earlier Rs 800 per ton, at least some benefit of this reduction in freight cost will go to consumers and they should benefit.

SOurce: ICMW