Coal news and updates

Govt may allow power cos to swap coal supplies with nearest fuel source

The government is likely to allow power companies to swap coal supplies with the nearest source to save costs and decongest the rail network. A policy for rationalisation of coal linkages is in the works and Coal India (CIL) will be overseeing swapping. "Two parties can suo-moto come to the designated authority with a mutually beneficial proposal," an official document said.

The government will set up a separate designated authority for swaps between supply from CILBSE -0.47 % and other coal sources. Interested parties could go in for mutual consultations. The coal and power ministries would assist the parties in coming to an agreement, according to the document.

The government has already identified rationalisation proposals of 21 public and private thermal power plants in Gujarat, Tamil Nadu, Maharashtra, Punjab, Haryana and Rajasthan. Global consulting firm KPMG — appointed to look into benefits of re-organising coal tie-ups— had reported that swapping coal supplies to fuel power plants with closest coal mines could save up to Rs 6,000 crore spent by power companies and Coal India in transporting the fuel across nation.

Besides logistics savings of Rs 4,500-Rs 6,000 crore, rationalisation of supplies would also lead to additional power generation of 3,500-mw with potential benefit of Rs 3,500 crore, KPMG report had said.

The report, submitted to the power ministry, said this will also decongest the railway network as average distance travelled by coal will come down to 429 km per tonne, from 589 km per tonne. It will hedge coastal power projects against any interruptions in supply.

Source: The Economic Times