CIC, OCPL tie up for sale of coal from captive block in Odisha

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Published: December 24, 2019 1:04:16 AM

The coal ministry has asked CIL to make such arrangements so that the required coal for power generation is made available to OPGC from nearby mines and CIL lift the coal from OPCL's captive mines at Monaharpur .

coal, icraWhile the government has aimed to curb imports of thermal coal, India’s thermal coal imports stood at 183.4 million tonne (MT) in FY19 and were likely to cross 200 MT in 2020, according to estimates made by Icra.

Coal India Ltd (CIL) and the Odisha government-owned Odisha Coal and Power Ltd (OCPL) have joined hands for sale of coal produced from OCPL’s captive block at Manoharpur in Jharsuguda as a part of initiatives of the Central government to produce more indigenous coal available to country beyond CIL’s production and cut imports.

While the government has aimed to curb imports of thermal coal, India’s thermal coal imports stood at 183.4 million tonne (MT) in FY19 and were likely to cross 200 MT in 2020, according to estimates made by Icra. The OCPL produced coal instead of going for captive use only will come into the entire system which even, if little, will add to the demand-supply chain.

The OCPL-produced coal is supposed to feed the (2×600 MW) IB thermal power plant of the Odisha Power Generation Corporation (OPGC), but in this case, though OCPL is producing just the required amount of coal OPGC needs for power generation , the coal cannot reach plant for lack of evacuation facilities.

So, the coal ministry has asked CIL to make such arrangements so that the required coal for power generation is made available to OPGC from nearby mines and CIL lift the coal from OPCL’s captive mines at Monaharpur .

In the wake of such a decision from the ministry, the CIL board has worked out a modality wherein its subsidiary, Mahanadi Coalfields Ltd (MCL), have entered into an agreement with OCPL for creating a provision of lifting coal mined from Monaharpur and MCL in turn would supply to OPGC.

Manoharpur coal block has a capacity to produce 8 MT per annum but as long as Manoharpur is under development phase and doesn’t produce, MCL through bridge linkage would supply OPGC 4.8 MT per annum for power generation.

Bridge linkage is a short-term linkage to bridge the gap between requirement of coal of a specified end-user until the start of production of required quantity and the linkage provided. The quantity in bridge linkage is reduced in proportion with the amount of coal produced from the linked block.

According to a CIL official, coal that is produced from the blocks allocated by the coal ministry is for captive consumption for the designated power plants.

The coal, according to Coal Mines Development and Production Agreement, is meant for end-use only. But, in a situation where the coal produced at the captive block exceeds the end-users’ requirement, there is a provision to release the excess coal to CIL, which the latter may supply to its consumers. This helps in making more domestic coal available to consumers bridging the demand-supply gap. But in this case, there was no excess supply but a first-of-its-kind swapping arrangement in which three parties — OPCL, OPGC and MCL — were benefited, a CIL official said.

According to the agreement, MCL shall receive 6,000 tonne of coal per day from OCPL which helps the latter to reduce its excess stock pile. To MCL’s advantage, this coal could be supplied to its customers. This would benefit the country by way of increased availability of domestic coal. For the purpose, MCL has designated a siding where it would receive coal from OCPL and would despatch the same to its own consumers through rail mode. However, OPCL has been allowed to continue the production from Manoharpur block so that the coal received enhances coal supplies to its consumers, particularly for liquidating the arrear rakes of the non-power consumers.

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