Coal India allows power companies to swap supplies

NEW DELHI: State-run power generating companies will now have the flexibility to swap their coal supplies and divert them to more efficient power plants.

Coal India last week signed agreements for aggregation of contracted quantity of coal with state and central power generating companies for flexible movement of coal that would help reduce the cost of power generation, a senior company official said.

The move will allow all coal linkages given to plants of state and central utilities like NTPC to be combined.

That is, if a utility has many plants all over the country and has different fuel supply agreements (FSA) for each plant, all these linkages will be considered as one FSA.

The utilities will have the option of deciding the effective way of utilising the coal, so that efficient plants are run at higher capacity to reduce costs, the official said.

"Till April 13, supplementary agreement has been signed for 368 million tonnes of coal of the total contracted capacity of 402 million tonnes with state and central power generation firms," the official said, adding that the balance agreements are expected to be signed within a few days.

The Union Cabinet in May last year approved the proposal for allowing flexibility in utilisation of domestic coal amongst state-owned power generating stations.

The scheme is gradually proposed to be extended to enable coal swaps between government-run and private power plants.

The government has said that improvement in coal quality and efficiency in supply chain have lowered power generation cost of NTPC stations.

This is despite revisions in coal prices, central cess and railway freight in the last three years.

Data shows that coal cost for generating power has declined by 39 paise to less than Rs 2 per unit in 2016-17, an official statement said.

According to the data, overall cost of power production for NTPC stood at Rs 2.01per unit in 2014-15, which has declined to Rs 1.94 in April-February of 2016-17.

Officials said that though the actual reduction was 6.4 paise per unit, if increased levies and charges are taken into account, the total drop in power output cost would translate to 39.5 paise.

Coal India Ltd