NTPC, Gujarat government ink pact to swap 1 mn tonne coal

National Thermal Power Corporation (NTPC) and Gujarat government run Gujarat State Electricity Corporation Ltd (GSECL) today inked a memorandum of understanding (MoU) to swap one million tonne of coal. The arrangement is likely to help both the companies save Rs 378 crore per one million tonne.

The agreement between NTPC and GSECL has been signed after a proposal for swapping coal was submitted to the Central Government two years back. Recently, the proposal of the Gujarat government was considered and approved by the Narendra Modi-led central government.

It may be mentioned here that GSECL receives domestic coal for its power plants located in Gujarat from Coal India Ltd’s (CIL) mines in Chhattisgarh, which is transported through rail route. On the other hand, NTPC imports coal for its power plants located in Chhattisgarh from Gujarat-based ports. This, according to the state government, results cross country transportation and involves huge transportation cost. In order to bring down the freight cost, a proposal for swapping coal was sent to the Central government two years back.

As per the new arrangement, the imported coal received by NTPC at Gujarat ports will be utilised by GSECL for power generation in Gujarat and the domestic coal of GSECL from Chhattisgarh will be used by NTPC for later’s power plants in Chhattisgarh.

NTPC will make payment of imported coal and GSECL will make payment for domestic coal to CIL. By swapping of coal both the utilities will be able to transport coal from nearby sources, which will result in saving Rs. 378 crore per million tonne of coal.

“As power generation increases in the country, import of coal is also set to increase. In such a case, states which are closer to ports should use more imported coal than those that are away from ports. We have been requesting the Centre since last five years to allow use of imported coal and instead swap our coal to save freight costs. It is only the new government which has expedited the process,” Saurabh Patel, minister of finance, energy and industries, Government of Gujarat said.

According to Patel, while the initial swapping of coal is for one million tonnes, the MoU has potential for coal swapping to the tune of 2.5 million which can offer benefit of Rs 945 crore to both the entities. Talking about passing on the benefits to the consumers, Patel said, “The benefit hence accrued from the coal swapping will be passed on to consumers in terms of reduction in fuel surcharge.”

Meanwhile, Patel also stated that Gujarat on Monday, September 29, saw the maximum power consumption of 13700 Mw. “In terms of units, the consumption comes to around 302 million units. What comes as an encouragement is that all sectors including agriculture and industry alike have seen growth in power consumption, thereby exhibiting development on all front. The agriculture sector alone consumed 75 million units,” Patel added.