Govt directs CIL to rationalise coal supply sources

The government has directed Coal India (CIL) to rejig the sources of coal it supplies to state-run utilities for power generation by reallocating resources on the basis of their proximity to generation units, thereby bringing down transport costs and easing pressure on tariffs.

The directive came on the basis of a recommendation made by an inter-ministerial task force set up by the Coal Ministry to look into the possibility of reducing the transport costs for coal sourced by generation units and assumes significance in view of spiralling international prices of the dry fuel amid a clamour by private companies for tariff hikes.

In addition, CIL has been asked by the Coal Ministry to reshuffle the sources of coal it supplies to certain steel, cement and sponge iron plants with the same motive of reducing transport fees and input costs.

The task force was set up by the Coal Ministry and comprised representatives from the ministries of coal, steel, power and railways.

It was formed last year with terms of reference to review the existing sources of coal supply and consider the feasibility of rationalisation of sources of coal supplied to identified units on the basis of applications made by the concerned companies.

However, there is a possibility that the ambitious plan will come a cropper in case any of the companies and units that have been included in the exercise resist the move, the task force has warned, as this would not facilitate the swapping of quantities of coal from different fields.

In this regard, it should be noted that the task force has not taken into consideration transport costs while making its recommendations and the coal from different fields also varies in terms of quality.

The proposed reshuffle is to be carried out in respect of coal fields allocated to 12 thermal power plants operated by Gujarat State Electricity Corporation, Madhya Pradesh Power Generating Company, Haryana Power Generation Company, Damodar Valley Corporation, West Bengal Power Development Corporation and the Tamil Nadu Electricity Board.

"After detailed analysis, in respect of 12 cases, which include plants of Gujarat State Electricity Corporation and Madhya Pradesh, rationalisation of existing sources has been proposed," a source in the Coal Ministry said.

Furthermore, the quantities of coal supplied from various sources to seven captive power plants, four sponge iron plants and three cement power plants are to be reshuffled by CIL, on the basis of the task force's recommendations.

CIL has been asked to provide a status report on implementation of the recommendations to the Coal Ministry by September 3.