In a first of its kind, Coal India Limited (CIL) has started buying 6,000 tonnes per day from the Manoharpur captive mine of OCPL, owned by the Odisha government, an official said on Monday.
Mahanadi Coalfields Limited (MCL), a subsidiary of Coal India, and Odisha Coal and Power Limited (OCPL) have entered into an MoU for provisioning of selling excess fuel from Manoharpur coal block in Jharsuguda to the miner.
The coal will be delivered to MCL at the notifed price, company sources said.
Manoharpur block with a production capacity of 8 million tonne per annum was 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).
Though coal production from the captive mine has started, the fuel could not be reached to the thermal power plant due to evacuation bottlenecks, forcing OCPL to stop mining, the official said.
Till the time production started from this block, MCL stepped in to supply coal to OPGC through bridge linkage to the tune of 4.8 million tonnes per annum.
Bridge linkage is a short term arrangement to bridge the gap between requirement of coal of a specified end use plant and the start of production from the allotted coal block.
Despite selling of 6000 tonne per day by OCPL to the coal behemoth, the bridge linkage sale from MCL to the power plant will continue, the official said.
"If MCL is able to sell this coal to non-power companies, the miner will have an extra margin of 20 per cent as non-power consumers have to buy at 20 per cent over the notified price. It could fetch higher realisation, if the coal is allocated for e-auction," the CIL official said.
However, CIL official pointed out that the arrangement is "not" meant for profit but to encourage higher production and availability of coal in the market.
The Ministry of Coal has been pushing for higher production to reduce imports of the dry fuel and has also advanced the one billion tonne target by CIL by two years to 2024.
Primarily, coal produced from captive blocks, allocated by the Centre, is for consumption by the designated end use power plants.
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 output to CIL but it was never executed, the official said.