In a first, Coal India turns buyer and signs pact with Odisha firm

OCPL can sell 6,000 tonnes of coal per day to Coal India at notified prices

In a first of its kind initiative, Coal India (CIL) has joined hands with a state government-owned coal company, Odisha Coal and Power (OCPL), to buy the coal produced from captive mining block in Manoharpur of Odisha. 

According to the agreement, OCPL can sell 6,000 tonnes of coal per day to CIL at notified prices meant for the power sector. CIL is at liberty to sell the coal either to power plants or to the non-power sector. In case it opts for the latter, CIL stands to gain 20 per cent over the cost of procurement from OCPL.

CIL has also designated a siding where it would receive coal from OCPL and it would be despatched to the buyers via the rail mode.

“It would not only help OCPL to lower its stock pile and sell coal, but the company can also continue production from Manoharpur block. From CIL’s perspective this excess coal received helps in enhancing coal supplies to its consumers, particularly for liquidating the arrear rakes of the non-power consumers”, a Coal India official said.

According to the official, primarily, coal produced from coal blocks allocated is for captive consumption in the designated end use power plants. 

However, in a situation where the coal produced at the captive block exceeds the requirement of the designated end use power plant, there is a provision in the Coal Mines Development and Production Agreement for supply of such excess coal to CIL. CIL may supply the coal thus received to its own customers. 

“This helps in making more domestic coal available in the system to bridge the gap between demand and availability”, the official said.

Manoharpur coal blocks have a production capacity of eight million tonnes (mt) and were allocated to OCPL in August 2015 to supply coal to the 1,200-Mw IB Thermal Power Plant owned by Odisha Power Generation Corporation (OPGC). 

Till the time production started from this block, Mahanadi Coalfields, a CIL subsidiary, stepped in to supply coal to OPGC through bridge linkage to the tune of 4.8 mt. 

Bridge linkage is a  short-term arrangement to plug the gap between the coal requirement of a specified end-use plant and output at the start of production from the allotted coal block.

Though coal production from Manoharpur block of OCPL started, the fuel could not reach the power plant due to evacuation bottlenecks, which forced OCPL to stop production.

Thereafter, CIL entered into an agreement with OCPL to buy the coal.

The arrear rakes of previous years to non-power sector which stood around 5100 at the beginning of the current fiscal have been brought down to a level of around 1,600 rakes.