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State govt-run power firms hit by huge cost of transporting their own coal

Freight cost comes to Rs 1000 per tonne; Firms submit plan to offer some coal from their mines in Chhattisgarh to power units in that state

R Krishna Das  |  Raipur 

Coal likely to remain in short supply until 2024: CIL tells govt

State public sector undertakings are paying a heavy price for transporting coal from the blocks allocated to them in remote areas of other states.

Power owned by the governments of Maharashtra, Rajasthan and Gujarat, for instance, have been alloted blocks on coal-rich Chhattisgarh. These excavate about 48.6 million tonnes (MT) of coal a year. The cost of transporting the fuel to their end-use plants works out to a staggering Rs 4,860 crore.

The freight cost comes to be around Rs 1,000 per tonne. The average distance of the end-use plants of the three from the blocks is 1,000 kilometers.

Maharastra State Power Generation Company Limited had been allotted Gare-II Sector Coal Mine in Chhatisgarh's Raigarh district. The company recently obtained environment clearance to start the operations after a public hearing. It will pay nearly Rs 2360 crore a year towards Railway freight for transporting 23 million tonnes per annum (MTPA) of coal from the mine to its plants in Maharashtra.

Rajasthan Rajya Vidyut Udpadan Nigam Limited would incur nearly Rs 2000 crore a year as freight cost for 15 MTPA from its Parsa East-Kante Basan and 5 MTPA from Parsa to its native state. Two of the mines in Sarguja district are operational. Gujarat will pay nearly Rs 500 crore for transporting 5 MTPA coal once the mining operation starts in Gare Sector-I mine in Raigarh.

“We have submitted a detailed presentation to the ministry of coal on the possible best solution to issue of high coal transportation costs,” said Pradeep Tandon, Chairman of Chhattisgarh Council of the Federation of Indian Chambers of Commerce and Industry (Ficci). It would make a huge difference if some of the coal mined in the blocks in Chhattisgarh were to be allotted to local power plants starved of the fuel, he added.

Instead of paying high freight cost, the coal could be used for generating power in Chhattisgarh itself and the state PSUs could supply it to the state concern. Besides reducing the traffic on the already saturated Railway network, it would also help reduce the power production cost in the respective state and benefit the consumer, Tandon said.

The module would help revive more 7,000-Mw of idle capacities in Chhattisgarh, shut down due to lack of coal in that state, Tandon added.

Pricey Business

Sl no Coal Block Allocatee End Use Plant : Distance in Kms Extractable Reserves (Million Tons) Mining per Annum (MTPA)
1 Gare Sector-I
Gujarat State Electricity Company UkaiTPP : 1289
Gandhinagar : 1436
Wanakbori :1325
1600.00 5.00
2 Gare Sector-II
Maharashtra State Power Generation Company Chandarpur 662
Koradi-nagpur 638
Parli-Beed 1147
655.00 23.60
3 Parsa East- Kante Basan, Surguja Rajasthan Rajya Vidhut Urja Nigam Suratgarh 1546
Chhabra 824
452.46 15.00
4 Parsa
Rajasthan Rajya Vidhut Urja Nigam Chhabra 824
Kalisindh 877
Suratgarh 1546
184.40 5.00
Total (Million Tons) 2891.86 48.60

Source: FICCI Chhattisgarh

First Published: Mon, October 14 2019. 17:10 IST