'Domestic coal to help cut cost'

Allocation of coal to as many as 24 units was delayed due to the earlier policy of the environment and forests ministry

Adani Power’s Tiroda power project in Maharashtra, using imported coal, will get a new lease of life. The Union cabinet on Thursday cleared coal mine allocations to nine power units, including Adani's, earlier stuck on environmental clearance.

“There will be significant decrease in our generation costs, as we will be able to source coal domestically,” said an Adani official. The 3,300 Mw project is yet to commission two more units, of 1,320 Mw. The capacity utilisation of the present 1,980 Mw is currently 85 per cent. This could go up to 90 per cent or more if cheaper domestic coal is available. About 80 per cent of the cost of producing power is fuel purchase.

Allocation of coal to as many as 24 units was delayed due to the earlier policy of the ministry of environment and forests. Until now, they were getting coal only by tapering linkages, where only 65 per cent of the needed supply would be received for the first two years.

“It has been proposed to provide additional coal supplies to these nine units for three years or for the period were affected by the said policy or till such time the production actually starts from the blocks, whichever is earlier,” stated the Cabinet Committee on Economic Affairs (CCEA).

It said requests were received from developers and it was recommended by the power ministry that some projects with tapering linkages could not develop their linked coal blocks reasons beyond their control.

Apart from Adani, plants of Vedanta group's Sterlite Energy at Jharsuguda, two power projects of GMR and of Hyderabad-based KSK Power Ventures were among those cleared.

“Power projects were struggling for coal or importing very costly coal, increasing their costs. With this, supply to many power projects will be regularised,” said Umesh Agarwal, associate director of PriceWaterhouseCoopers. Some projects were also set up and waiting for coal without generating, due to the cost of imported coal.