Coal news and updates

Freedom to use coal in any power generation unit, instead of prefixing its source and consumption point, will reduce cost of generation for state and central power companies said ICRA. 

The government on May 4, 2016 has approved flexibility in utilization of domestic coal with the objective of allowing an optimal use of domestic coal by the generation utilities for reducing power purchase cost of state owned distribution utilities. "Coal is transported over anything between 100 km and 1000 km. 

On an average it travels 700 kilometer because sources of coal for every generating station is prefixed. Freeing up consumption points will lead to optimal utilization and help lower transportation costs. This in turn will lead to reduction in power purchase cost for distribution utilities. For every 100 km reduction in coal haulage, cost of generation would reduce by 9 paise per unit," said Sabyasachi Majumdar, senior vice president at ICRA Ratings. 

The actual savings would vary depending on actual reduction in distance between mine and generating station, given that linked coal mines are at a distance varying from 100 km to 1000 km from the end user plants. The proposal envisages that all the long term coal supply contracts of state generating stations will be clubbed and assigned to respective states or state nominated agency. Similarly, coal linkages of individual central generating stations will be clubbed and assigned to the company owning them, so as to enable efficient coal utilization or allocation amongst end use generating stations. 

From the distribution utility perspective, relief in cost of power supply would be dependent upon the sourcing mix of coal based energy and average distance travelled for coal transportation for generation utilities in the state.

Source: Economic Times