The government is set to allow power generation units run by central and state governments and public-sector undertakings to transfer coal stocks among themselves to cut costs by optimum use of efficient plants. The move will enable these entities to cut fuel expenses by Rs 36,000 crore per annum.
“The transfer of coal between one state and another as well as between any state and central generating companies will be implemented as per mutually-agreed terms and conditions, under the ambit of the regulations of central and state regulators so as to reduce the cost of power generation,” a committee set up by the power ministry under the Central Electricity Authority said.
While confirming that the scheme would soon be implemented in the interest of consumers, official sources said a view was yet to be taken on whether the facility should be extended to private power companies.
Nearly half of Coal India’s estimated production of about 600 million tonne in the current financial year will come under the flexible transfer scheme, benefiting Centre-run firms such as NTPC and the Damodar Valley Corporation as well as plants run by state electricity boards.
If private power generators, which consume around 170 million tonne of coal annually, are given the same freedom, power tariffs could potentially come down.
Currently, even as many old power plants are severely under-utilised (the average pan-India plant load factor is just over 60%), coal received by these units under the government’s so-called linkage policy remains with them, leaving more efficient plants starved of the fuel.
According to sources, the government would notify the rules for bringing private companies under the scheme only after it is convinced that they will reduce the cost of power for consumers. The committee, which drafted the scheme’s methodology, includes stakeholders such as the power ministry, coal ministry, railways ministry, Central Electricity Regulatory Commission (CERC), NTPC, Coal India and POSOCO, the nodal agency for transmission of power.
According to the rules, a state would collect the data on long-term linkages for its power plants and categorise the same on the basis of CIL arms that supply the fuel. The same exercise would be replicated for central generating stations. This will be executed for each state either by a state-owned power company or a central generating company, to be decided by the state government. The nominated company would then have the total requirement of coal for government-owned plants and also the source coal companies.
“To achieve the objective of reduced energy charges, the generating company or the state will communicate to coal companies its station-wise requirement from different sources within the ambit of overall annual contracted quantity (ACQ) allotted to the state,” the committee’s report said. It added that the coal would be used in an optimal manner in different stations of the central and state generating companies.
The guiding factor in the use of aggregated coal would be reduction of transportation costs and using the fuel across plants to achieve the optimal cost of generation. “Generating companies may utilise coal in its own generating stations by considering various factors such as operational efficiency of generating stations, transportation, logistic and feasibility depending on the location of generating stations, fixed and variable charges including transportation cost, relative merit order dispatch of power, etc,” the committee said.