Coal India, Singareni Collieries Company offer power firms option to swap fuel sources

17-Sep-2018

Coal India and Singareni Collieries Company are offering independent power producers the option of swapping their sources of fuel supply to cut the cost of transportation and generation.

The Central Electricity Authority will oversee the one-time offer for power generators willing to pass on the savings to customers. This would also require regulatory approval.

“The plan is to change source of coal for as many independent power producers as possible, keeping the quality of coal at almost same levels after the swap. It is expected to reduce distance over which coal is sent, reducing transport costs, cost of generation and finally electricity bills for consumers,” said a senior Coal India executive.

The scheme is being offered to power companies that receive coal from state-owned suppliers by rail. At present, coal supplies are based on allocations made over the years to power plants and they are not necessarily the shortest distance between the mines and the generation units.

A similar scheme for state-owned power units helped save almost Rs 6,000 crore three years ago. The scheme is not being offered to plants that receive coal by road as they are already near pitheads.

If several plants compete for the same pithead, the one with the largest cost savings would be offered the swap. The saving would be assessed using a CEA formula that also accounts for change in energy content if the source is changed.

Coal currently travels 477 km from a mine to a plant, with some power stations located up to 1,000 km away.

The voluntary scheme would work on the basis of availability of mines and a consumer’s willingness to accept the quality of coal from another source, the executive said. “An inter-ministerial task force has been formed to resolve issues private companies may face while implementing it,” the executive said.

Coal India, based in Kolkata, produces about 84% of the country’s coal. Singareni Collieries operates in four districts of northern Telangana and supplies coal to most customers in the state and parts of south India and Maharashtra. The company produced 62.01 million tonnes of coal during 2017-18.

Source: THE ECONOMIC TIMES