Gujarat first state to implement coal utilisation between power units

State invites developers to sell power at less than Rs 2.82/unit to receive cheap coal

Setting a precedent, the Gujarat government has issued a tender for power developers to receive cheap coal marked for the state in return for selling coal-based power at less than Rs 2.82 a unit.

Through the auction, Gujarat will transfer the coal allocated to power generating stations owned by Gujarat State Electricity Corporation (GSECL) to more fuel-efficient private power plants.

The reverse auction would be held in September for procuring 1,000 megawatt (Mw) of power. The successful power plant would be selling electricity to the state from October 1 to June 30, 2018, said officials in the Ministry of Power.

They said the average landed cost of coal for the seven thermal power units of GSECL was Rs 4,812 a tonne, of which half is accounted as transportation cost. GSECL has allocation from the Korba coalfield in Chhattisgarh and Korea Rewa coalfield in Madhya Pradesh. 

The move is in line with the initiatives of the central government to ensure fuel availability to stressed power plants. The aim is to reduce the cost of fuel for financially ailing distribution companies and ensure effective distribution of domestic coal. 

In May last year, the Union Cabinet approved a proposal for allowing flexibility in utilisation of domestic coal among power generating stations. Under the new policy, the coal requirement of a state would be clubbed and assigned to the respective state or state-nominated agencies. The state would then award coal linkage based on need, efficiency and cost of electricity to power plants in its territory.

The policy also allowed coal swaps from inefficient plants to efficient ones, and from those situated away from coal mines to the pit-head, to minimise cost of coal transportation thus. leading to reduction in cost of power.

For central-owned power plants, coal linkages of individual central generating stations (CGS) would be clubbed and assigned to the company owning the CGS, to enable more efficient coal utilisation amongst end-use generating stations. For use of coal in state or central generating plants, the deciding criteria shall be plant efficiency, coal transportation cost, transmission charge and overall cost of power.

Privately owned independent power plants would have to bid for the coal linkage. The basis of bidding would be the location of source of coal, quantity of coal, quantum of power and delivery point for the receipt of power, which they would have to indicate upfront.