Cabinet allows flexible use of domestic coal by power plants

Government today relaxed norms for utilisation of domestic coal that will help bring down the cost of power generation by 40 to 50 paise per unit and eventually lead to yearly savings of up to Rs 30,000 crore in the next 4-5 years.
"The Union Cabinet has given its approval for allowing flexibility in utilisation of domestic coal for reducing the cost of power generation," a press release said.
Later after the Cabinet meeting here, Power Minister Piyush Goyal told reporters, "Our own estimate is that this could result in bringing down cost of power (generation) by 40 to 50 paise per unit. In the next four to five years, it could lead to savings of Rs 25,000 to Rs 30,000 crore per year."

He further said, "We have now allowed all coal linkages which are given to plants of state utilities, central utilities like NTPC, to be combined... The state and the central utilities will be given freedom to utilise that coal in most efficient and effective manner to reduce the cost of power."
Elaborating further, he said, "So, if NTPC has 40 plants all over the country and has different linkages for each plant so all those linkages will be considered as one. They can see which is the most effective way of utilising it so that the modern and new plants run to higher plant load factor. This will reduce cost of power which will passed on to consumer of India."

The minister also said, "Initially this will be allowed for central and state utilities and once the successful implementation of the first phase (is over). We will also consider it for the private sector."

According to statement, in case of use of coal in state/ central generating plants, the deciding criteria shall be plant efficiency, coal transportation cost, transmission charges and overall cost of power.
In case of use of coal assigned to the state in private generating stations, power through substituted coal shall be procured on bidding basis from amongst the competing private sector plants, where the source of coal, quantity of coal, quantum of power, and delivery point for the receipt of power shall be indicated upfront, it added.

This proposal is also in line with the UDAY scheme of Government of India which also envisages liberally allowing of coal swaps from inefficient plants to efficient plants and from plants situated away from coal mines to pit head to minimise cost of coal transportation thus leading to reduction in cost of power.
The Central Electricity Authority shall in consultation with all the stakeholders, issue the methodology for implementation of use of coal assigned to the state(s) in their own generating stations, other state generating stations, central generating stations (CGS) and Integrated ProcurementProduction (IPPs).
Similarly, methodologies for use of coal by company owning CGS for use of coal in their own plants or any other efficient plants shall also be issued by Central Electricity Authority.