KOLKATA (miningweekly.com) – India’s Coal Ministry has directed government coal mining companies to immediately implement rationalisation of coal linkages of independent power producers (IPPs), but has laid down strict conditions for the latter to be eligible to switch coal supply sources.
Through a government order issued last week, the Coal Ministry has directed Coal India Limited (CIL) and Singareni Collieries Company Limited (SCCL) to “take immediate necessary action” to implement the methodology prepared by an inter-Ministerial task force to rationalise coal supply linkages aimed at reducing the distance between existing coal supply sources and thermal power plants of IPPs.
IPPs would be permitted to switch their existing coal supply source with an alternative mine close to their plant location and ease pressures on national transporter Indian Railways in supplying rakes over longer distances and thereby saving costs on coal transportation, savings which could be passed on to end consumers of electricity.
However, the latest government order has laid down conditions based on which IPPs would be eligible to switch coal sources.
For one, private thermal power plants that had secured coal linkages through competitive bidding at auctions would not be permitted to switch linkages and only coal supplies granted through ‘allotment route’ would be eligible to switch fuel sources, the order stated.
Thermal power plants also would not be permitted to source alternative coal supply from mines closer to the plant location in lieu of offer of coal imported by IPPs, which in effect would be barter, nor would private thermal power producers having captive coal mines be allowed to seek alternative coal supplies, the order said.
Government coal companies, in turn, would consider only one submission for switching of coal supply linkage with IPPs having to commit a minimum order quantity and their preferred mode of transportation.
While it has been made mandatory for IPPs to pass on savings on fuel transportation costs to electricity consumers, the Coal Ministry-approved linkage switch methodology also provided that savings on account of a change in gross calorific value in coal supplied from alternative mine also had to be passed on to electricity consumers.
Meanwhile, in a related order to all thermal power plant operators, the Coal Ministry has directed that operators not resort to lowering of coal offtake citing low demand for electricity during the current monsoon season, and maintaining lower than normal stocks to avoid coal getting wet by the monsoon rains.
The Coal Ministry has pointed out that such steps of maintaining minimal coal stocks during rainy season last year had resulted in arush for coal supplies as soon as the rainy season ended, triggering a massive coal shortage in the months ensuing from September last year.
During the April to June quarter of the current financial year, CIL coal dispatch was recorded at 122.48-million tons against 106.46-million tons during corresponding period of the previous financial year and thermal power plants were required to maintain the momentum of fuel offtake even during the monsoon season, the Ministry order said.